In California, Allstate wants to increase homeowner’s insurance premiums by an average of 34.1%. The Department of Insurance is currently looking at their request.
If authorized, it would affect over 350,000 policyholders and constitute the biggest rate hike this year.
Owner of an insurance business and industry analyst Karl Susman stated, “It doesn’t surprise me to see Allstate taking some significant rates right now, because they are way behind the eight ball as far as the industry is concerned.”
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According to Susman, Allstate’s request to increase rates by an average of 34.1% is reasonable given the escalation of policies in other regions.
Allstate informed CBS 8 that the need for it stems from increased repair costs, more frequent and severe weather, and abuse of the legal system.
However, theirs is the greatest thus far this year, exceeding State Farm’s request last month for a 30% hike. made last month. Susman stated that although it’s a bitter pill to chew, not every policyholder would be affected equally.
“That does not imply that a 34.1% increase will be given to every Allstate customer. It indicates that there is a range. Certain individuals will experience a reduction in their premium, which might result in savings of up to 57% or, shockingly, 647%. That upper end may be covered by a single policy, right? The total weighted average of the impacted policies is probably + 34, but we don’t know that,” Susman added.
Allstate must wait several months for the Department of Insurance’s approval as per state law.
A department spokesman said in a statement to CBS 8:
“The Department of Insurance’s top priority is to protect consumers. Under Prop. 103, insurance rates must be justified to ensure policyholders do not pay any premiums that are excessive.
Also under Prop. 103, insurance companies are not required to write policies. However, one major component of the Commissioner’s Sustainable Insurance Strategy is securing commitments from insurance companies to write new and expanded coverage in more areas of our state, especially in wildfire distressed areas.
As with all rate filings, the Department of Insurance’s experts will review all of the relevant data and make fact-based decisions under the guidelines of Prop. 103 to keep insurance fair and available for all Californians.
The Allstate homeowners filing was received by the Department on April 14, 2023, and included on the May 19, 2023 Public Notice. Their initial rate request was +39.6%. Consumer Watchdog petitioned to intervene in July 2023. In January of this year, Allstate amended their rate request to +34.1%.
This is a complicated rate filing where Allstate is switching complex wildfire models and introducing its wildfire mitigation discounts in compliance with the Commissioner’s Safer From Wildfires regulation. The rate filing is currently under review by the Department.”
Allstate stopped writing new insurance in California in 2022, but they said they would start again once the state made some changes to its rules.
That will make more companies want to come back to California, Susman said, and rates will go down. Susman said not to shop around just yet, even though a request for a rate increase might be upsetting. Instead, they should wait it out.
“Stand still and hold on tight. Please be aware that your bill will not be going up tomorrow. “And hopefully by the end of the year, when the Department of Insurance’s new rules come out and the market reopens, it won’t matter because you’ll have other options,” Susman said.
