Fireman's Fund will lower homeowners insurance rates in California by 17.9 percent after negotiations with the state's Insurance Department. The decrease is over three times greater than the percentage that the company had originally sought.
Consumer Watchdog, a consumer group, said that it had challenged Fireman's Fund's original request for a 5.6 percent rate decrease, and after discussions with Fireman's Fund and the department, the parties agreed on the 17.9 percent figure.
"The rate agreement was reached under amended regulations issued by the Department of Insurance last year that revised guidelines for profitability and allowable expenses under the rules of Proposition 103," Consumer Watchdog said in a statement.
Under the 1988 Proposition 103 voter initiative insurance companies are required to open their books and submit to public hearings to justify that rates are adequate without being excessive.
Individuals may intervene in or initiate proceedings to challenge any rate that is unfair or excessive.
Consumer Watchdog claimed that Fireman's Fund used "illegal costs, excessive profit levels, and inflated loss projections" in calculating its original 5.6 percent figure.
Responding to inquiries via email, Susan Murdy, Fireman's Fund spokesperson, said, "Fireman's Fund filed in 2007 to bring 'green' homeowners insurance to the California marketplace. At the same time, we saw a need to reduce our rates to be more competitive in the state.
"During these discussions, deeper rate reductions were sought that were not appropriate. The agreed rate reduction makes sense to Fireman's Fund."
The California Department of Insurance did not immediately respond to a request for comment.
Allstate recently dropped its appeal of a mandated 15.9 percent rate decrease for auto insurance rates in California. Allstate had sought a stay of the rate cuts in April, but was denied by Superior Court Judge Peter Busch in San Francisco.
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