California Insurance Commissioner Steve Poizner said today the Department of Insurance will seek refunds for Allstate home insurance customers if it determines that their rates are excessive.
This would be the first time in California history that a retroactive refund is ordered following a rate hearing, he noted. Mr. Poizner promised to scrutinize the carrier's rates earlier this month after Allstate announced it would not take new business in the state.
The department has issued a show cause order requiring the Northbrook, Ill-based carrier to prove that its homeowner rates in the state are not excessive.
Allstate's announcement earlier this month that it is no longer writing new home business in the state raised concern from the commissioner about its propriety.
"I am drawing a line in the sand," said Mr. Poizner. "If I find that Allstate's rates are excessive, refunds will occur. I will take clear and decisive action to protect consumers."
While virtually every other insurer has lowered rates over the past year–equaling savings of $1 billion for consumers in 2006–Allstate has submitted a request for a substantial rate increase. This request is currently pending before the department and will be heard in September.
At the conclusion of the hearing, the commissioner will determine the validity of the rates. If they are deemed excessive, the commissioner will order Allstate to reduce its rates and determine whether refunds are warranted.
Department spokeswoman Jennifer Kerns said that while the excessive rate and normal rate hearings will be one and the same, the show cause order will require the company to provide more extensive data.
California's Proposition 103 prohibits excessive rates and directs the insurance commissioner to take necessary steps to lower them when excessive.
In the days since Allstate announced it would no longer write new homeowners policies in California, insurers such as Safeco and Farmers Insurance have said they will expand their presence in the California market, particularly in the area of homeowners insurance.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.