Map: Here’s where Allstate wants to raise California homeowners’ insurance rates
In yet another sign of instability across California’s home insurance market, Allstate is seeking to raise policyholders’ premiums by an average of 34%.
The insurance giant, the sixth largest provider in the state, is asking regulators to approve what would be its steepest
The request follows double-digit rate hikes by many major insurers in the state in recent years. It also comes as
“Consumers have been hard hit by the massive rate increases insurance companies have imposed recently, and Allstate customers would be in the same situation,” said
Providers, meanwhile, have suffered billions of dollars in losses during recent catastrophic wildfire seasons. Even as regulators have approved more rate increases, insurers argue that California’s strict regulations on setting premiums have left them in an untenable situation.
They’ve dropped hundreds of thousands of policyholders in fire-prone areas such as
In a statement, Allstate said the overall increase is necessary to cover higher insurance payouts due to more frequent and severe weather events, growing repair costs amid inflation and “legal system abuse.” The company did not provide details on the specific legal issues.
Under Allstate’s proposed rate increase, the vast majority of policyholders — including those in the
In the
On average,
The state insurance department is currently reviewing Allstate’s rate request — initially submitted last year and updated in January — and will have final say over the size of the increase and when it could go into effect.
“Insurance rates must be justified to ensure policyholders do not pay any premiums that are excessive,” the insurance department said in a statement.
It’s not yet clear when the new rates could be approved. That’s in part because Consumer Watchdog has filed an appeal of the proposed increase, asking for information on why Allstate believes the rate hikes are warranted.
That means Allstate, Consumer Watchdog and the insurance department could soon reach a deal on a potentially lower rate hike. But if the groups fail to come to an agreement, regulators would begin holding public hearings to make a final determination on Allstate’s request, a process that would likely take months.
In an attempt to stabilize California’s home insurance market, state insurance regulators are working on a plan that would allow providers to raise rates based on the growing threat of climate change — long an industry demand — in exchange for expanding coverage in parts of the state with the greatest wildfire risk.
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Consumer advocates, however, worry the new regulations would also mean steep rate hikes calculated through an opaque process without sufficient oversight.
In the greater
The insurance department aims to finalize the new regulations by the end of the year.
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