Garamendi Responds to Decision on Allstate

California Lieutenant Gov. John Garamendi, who served two terms as California’s Insurance Commissioner, issued the following statement regarding Insurance Commissioner Steve Poizner’s decision to drop the effort to seek refunds for Allstate policyholders who paid too much for their homeowner’s coverage.

“On behalf of consumers across the state, I am alarmed and disappointed at Insurance Commissioner Poizner’s decision to drop the efforts to seek refunds for Allstate policyholders that paid too much for their homeowner’s coverage. This “unannounced” decision made by Poizner through a settlement with Allstate goes against the transparency and protection that consumers demand and deserve. Nearly twenty years ago California consumers rose to take control of their insurance cost by passing proposition 103. This gave the state's elected insurance commissioner broad powers to set companies' rates, ensuring that they are not "excessive, inadequate or unfairly discriminatory. During my two terms as Insurance Commissioner, I took that job very seriously and my Administration worked diligently to protect consumers. Before I left my post as Insurance Commissioner in mid 2006, I ordered Allstate and several other companies to show that their rates were not excessive."

Garamendi, who announced last week that he would seek the Governor's office in 2010, added, "Three years later, Allstate agreed to slash their rates and not continue to pocket far more of the policyholders' money than was warranted. Although this is a positive step for consumers going forward, those consumers that were at the mercy of Allstate’s high rates in the past deserve a rebate for the three years in which they were charged an illegal amount.”

Poizner recently dropped an effort to seek refunds for Allstate Corp. policyholders who might have paid too much for their homeowners' coverage in recent years.

On July 10, Poizner reported that Allstate had been ordered to slash its homeowners' rates by 28.5% for policies that begin or renew after July 30. His office said at the time that it was still pending on whether a refund would be ordered for previous years.

In an unannounced legal settlement July 31, Allstate agreed not to contest Poizner's rate cut order. In return, Poizner, who is also thought to have an interest in the Governor's office in 2010, agreed to "not take any action" based on allegations that Allstate previously charged rates that were excessively high.