California Insurance Commissioner Steve Poizner today termed Allstate's decision to no longer write new property policies in the state "shortsighted" and ordered the carrier to prove it is not charging excessive rates.
"I expect there will be no shortage of insurance companies who will be more than happy to compete to serve more than 1 million Allstate customers," he said in a statement.
Robert Barge, California field vice president for the Northbrook, Ill.-based carrier, said in a statement the carrier will stop writing new policies "to be in a strong position to help protect customers in California and across the country."
Mr. Barge said that Allstate has developed a program in which more that 1,200 agencies in the state will help new customers looking for property insurance to obtain coverage through Pacific Specialty Insurance Company, a firm not owned by Allstate. Allstate will continue to renew all current customers, he said.
Commissioner Poizner said that companies such as Farmers, Safeco, State Farm, AAA, and Hartford have reduced insurance rates for California customers by more than $1 billion, in direct contradiction to Allstate's actions.
"Allstate's decision to not accept new business does not entitle them to charge excessive rates," he said.
He said that in the coming weeks, the Department of Insurance will be watching Allstate's actions very closely to ensure that consumers are protected, and that Allstate fulfills its contractual obligations to its customers.
Company spokesman Rich Halberg told NU Online News Service that a hearing has been set for September of this year on the company's 12 percent rate increase request, at which time it will demonstrate the need for such a hike.
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