WFCN –
It’s in Sacramento, California. State Farm and Allstate, two of California’s largest home insurers, are proposing rate hikes of at least 30% each.
This week, the San Francisco Chronicle reported that in the last three years, Allstate had requested the most increase in homeowners insurance rates of any major insurer.
As it is legally obligated to do, the company is requesting approval from the California Department of Insurance (CDI) to increase the cost of homeowners insurance policies by an average of 34.1%, according to CDI to ABC10.
The vast majority of the 350,000 policyholders fall somewhere in the middle of that range. The proposal, if accepted, would result in price reductions of up to 57% for some consumers. However, a 647% rise would be felt by at least one household.
“Just because they are asking for these rates, number one: it’s not going to happen tomorrow, and number two: it has to be approved; every single part of it has to go through the Department of Insurance,” explained Karl Susman, an insurance specialist from Susman Insurance Agency.
Allstate first submitted its request in April 2023, and since then, CDI has taken months to make a decision.
This is according to what Allstate informed the Chronicle: “our payments to help California residents recover from accidents and disasters have increased significantly in recent years due to higher repair costs, more frequent and severe weather and legal system abuse.”
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The most recent authorized raise for Allstate was a 4% average in April 2023, as reported by CDI. Its prior two years, 2021 and 2019, showed increases of 6.9%.
The biggest home insurer in California, State Farm, has filed for an average home insurance premium hike of 30%, a renter premium increase of 52%, and a condominium premium increase of 36%.
“Importantly,” Susman remarked, “State Farm’s request at 30% is slightly different because they are asking for their increase not based on anything other than financial solvency, which is a slightly different process they have to go through.”
It is the stated goal of State Farm to ensure its continued viability in the Golden State. State Farm General must implement rate adjustments in response to rising expenses and risks in order to fulfill the daily promises made to clients.
The latest rate filings from State Farm General cast severe doubt on its financial health, according to a written statement by California Insurance Commissioner Ricardo Lara. Millions of Californians might be impacted, and our home insurance industry could be compromised as a result. Under the power granted to me by Prop. 103, I shall look into the financial status of State Farm… As of this writing, these filings have no effect on State Farm policyholders. First and foremost, we will use evidence to guarantee the safety of Californians.
After being approved in late 2023, State Farm’s most recent rate increase—an average of 20%—went into effect in March 2024.
Even while it’s discouraging to hear about proposed policy changes and rate hikes, you can tell yourself, “At least there’s activity, isn’t there?” That which is dynamic also has the capacity to undergo transformation, Susman remarked.
A more competitive insurance market may result from more insurers resuming full operations in California, among other potential changes.
Some big policy changes have a due date soon. It was in September when California Lara introduced their Sustainable Insurance Strategy.
It is a set of suggested rules that will better equip insurance companies to set fair premiums. Customers would thus be able to take greater pride in their efforts to safeguard their homes from wildfires, and the department claims that insurance plans would become much more widely available.
By the year’s end, according to Lara, he hopes to have these rules established.