State Farm, Farmers Given Green Light to Up Prices

California Insurance Commissioner Steve Poizner has given the green light to two of California's largest home insurers - State Farm and Farmers - to increase premiums by a combined $115 million.

State Farm (top insurer) customers will soon face an average 6.9% hike and Farmers (third largest insurer) policyholders' rates will climb 4.1%.

"In an economy like this, Californians are relying on the insurance commissioner to keep premiums as low as possible, but Commissioner Poizner refused to hold a hearing to investigate rate hikes that will affect more than 2.5 million homeowners," said Douglas Heller, Consumer Watchdog's executive director. "We reviewed the proposed rate increases and concluded that they were unjustified. The commissioner should not have allowed these insurers to jack up prices like this."

The group is expressing concern that other insurers will press the Department of Insurance for more rate hikes as their investment portfolios drop.

The group pointed to Allstate (second largest insurer), which was forced to lower its California homeowners' insurance rates by about $250 million last spring. Allstate requested a 6.9% rate hike increase for homeowners in September. That proposal is still under review by the Department of Insurance.