The California Department of Insurance confirmed it has approved the latest filing from the nation’s sixth largest home insurer, raising rates in the Golden State by an average 34%.
Allstate was approved this month for an average 34.1% rate increase it requested in April 2023, the California Department of Insurance confirmed.
The new rates impacting more than 350,000 policyholders will go into effect Nov. 7. It received approval Aug. 8.
Allstate has pointed to the increased number of accidents and natural disasters that necessitated the change.
“This home insurance rate approval allows us to continue protecting our existing customers as we work with the California Department of Insurance to improve coverage availability and create a more viable and sustainable homeowners insurance market for consumers in the state,” Allstate spokesperson Teny Josephbek said in a statement.
The changes follow several rate increase requests from other insurers in the last year. State Farm, California’s largest insurer, received approval earlier this year from the Department of Insurance for a 20% increase.
The state is likely to approve many of the rate hike requests as it attempts to close the door on insurance carriers leaving California.
Many insurance firms have threatened to pull out of the wildfire-prone state unless California Insurance Commissioner Ricardo Lara devises and implements a survival strategy for an industry in crisis. The Department of Insurance refers to that proposal as the Sustainability Insurance Strategy, which uses catastrophic rate modeling.
A town hall-type virtual conference call is set for 10 a.m. Sept. 17. Written comments can be submitted to [email protected].
Industry sources contend the companies have lost money in the wake of multiple, costly catastrophes that keep mounting each year. Between 2016 and 2017, the number of structures destroyed went from 1,274 to 10,868, according to Cal Fire.
But consumer watchdog groups fear insurance companies will run away with rate hikes, thus making living in California even less affordable.
Under Proposition 103 enacted in 1988, insurance rates must be justified to ensure policyholders do not pay any premiums that are considered excessive.
But there’s a wrinkle that gives leverage to the insurance companies.
“They are not legally required to write more policies,” Department of Insurance spokesman Michael Soller said.
That’s the delicate balance the state is trying to strike — keep insurance companies engaged and maintaining coverage while supporting them in a viable industry.
Allstate represents California’s sixth largest home insurer, about 5.5% of the overall market, according to InsuranceNewsNet.com, an online insurance information source based in Camp Hill, Pennsylvania.
Susan Wood covers agriculture, law, cannabis, production, transportation as well as banking and finance. She can be reached at 530-545-8662 or [email protected]
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