News: 2007 Press Release

Rate hike review may lead to "checks in the mail" for Allstate's California consumer

SACRAMENTO -- California Insurance Commissioner Steve Poizner announced today the Department of Insurance is issuing an Order to Show Cause that will require Allstate to demonstrate that their rates are not excessive.

Commissioner Poizner also announced his intent to seek refunds for Allstate customers if the Department of Insurance 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.

"I am drawing a line in the sand," said Commissioner 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 the Fall. 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.

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 vowed to expand their presence in the California market, particularly in the area of homeowners insurance.

Copy of Allstate's Order to Show Cause.