SAN DIEGO:
Allstate intends to increase homeowner’s insurance premiums in California by an average of 34.1%.
Their request is currently being examined by the Department of Insurance.
More than 350,000 policyholders will be impacted if authorized, making it the biggest rate rise this year.
According to industry analyst and owner of an insurance business Karl Susman, “it doesn’t surprise me to see Allstate taking some significant rates right now, because they are way behind the eight ball.”
Susman states that given the escalation of policies in other areas, Allstate’s request to raise rates by an average of 34.1% is reasonable.
According to Allstate and CBS 8, it’s necessary because of rising repair costs, more frequent and severe weather, and abuse of the legal system.
However, theirs is higher than State Farm’s proposal for a 30% increase last month, making it the largest so far this year.
Even while it’s a bitter pill to chew, Susman noted not every policyholder will be affected equally.
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It does not follow that each Allstate customer will receive a 34.1% rise. It denotes the existence of a range. Certain individuals will receive a deduction, which might result in a premium reduction of up to 57%, or, shockingly, up to 647%.
Let’s say that high-end is covered by a single policy. Susman stated, “We don’t know, but the aggregate weighted average of the impacted policies is roughly 34.
Allstate must obtain clearance from the Department of Insurance per state law, which may take several months.
A department representative said the following in a statement to CBS 8:
“Protecting customers is the main concern for the Department of Insurance. To prevent policyholders from paying exorbitant premiums, insurance rates are required under Prop. 103 must be justified.
Additionally, insurance firms are exempt from writing policies under Prop. 103. Securing promises from insurance companies to write new and expanded coverage in additional areas of our state, particularly in areas affected by wildfires, is a significant part of the Commissioner’s Sustainable Insurance Strategy.
To maintain fairness and accessibility to insurance for all Californians, the Department of Insurance’s experts will evaluate all pertinent facts, as they do with all rate filings, and make fact-based decisions by Prop. 103 criteria.
On April 14, 2023, the Department received the Allstate homeowners filing, which was then published on the public notice on May 19, 2023. They asked for +39.6% as their starting rate. July 2023 saw a plea for intervention from Consumer Watchdog. Allstate revised their requested rate to +34.1% in January of this year.
Allstate is implementing its wildfire mitigation discounts and switching to more complex wildfire models in this intricate rate filing to comply with the Commissioner’s Safer From Wildfires regulation. Currently, the Department is reviewing the rate filing.”
Allstate said it would resume policy writing in California after new state requirements are implemented, but it ceased in 2022.
According to Susman, rates will drop and more carriers will return to California after that.
Susman advised waiting it out rather than shopping around just now, even if a rate rise request may be startling.
“Hold on tight and stand by. Recognize that tomorrow will not bring an increase in your bill. It should become irrelevant by the end of the year when the Department of Insurance releases its new regulations and the market opens again because you will have other options, according to Susman.
