Insurance Commissioner John Garamendi said yesterday he will approve an 18 percent decrease in homeowner and renter insurance premium rates for The Hartford Insurance Company.

The announcement comes after Wednesday's action when he ordered four other major insurers to justify apparent excessive rates, the commissioner noted.

Citing an extraordinarily low percentage of premium dollars used to settle policyholder claims, Mr. Garamendi ordered State Farm, Allstate, Farmers and Safeco to prove that their current rates were not excessive.

If they fail to provide the necessary proof, he said rate reductions will be ordered, benefiting more than 4.1 million policyholders served by these companies.

Mr. Garamendi's move on home rates follows a Department of Insurance study of the loss ratios of the top twenty insurers in California that found the four companies, representing 51 percent of the California homeowners' insurance market, pay far less than 50 cents of each premium dollar to settle policyholder claims.

In 2005 State Farm paid 37.6 percent of each premium dollar for claims; Allstate paid 41 percent; Farmers paid 37 percent; and Safeco paid 26.3 percent. Some insurers have claimed that such a large percentage of premium remaining with the company is needed to build financial reserves and surplus. However, according to the department, the companies' own filings with the agency disprove this contention.

“These companies have very strong financial reserves,” said Commissioner Garamendi. “Therefore, they do not need to build surplus by maintaining such extraordinarily low loss ratios. I will not allow the insurance industry to charge excessive rates at the expense of consumers.”

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