State Farm ordered to reduce homeowner and rental rates and issue refunds
News: 2016 Press Release
State Farm requested a rate increase of 6.9 percent. Based on the evidence presented during a rate filing public hearing, the commissioner determined that rates charged by State Farm are excessive. Specifically, Commissioner Jones is ordering State Farm to reduce its homeowner insurance rate by an average of 5.37 percent, its renter insurance rate by an average of 20.39 percent, and its condominium insurance rate by an average of 13.81 percent -- for a total average of 7.0 percent.
"After considering the evidence and actuarial analyses submitted, I concluded State Farm's homeowner, rental and condo insurance rates are excessive," said Commissioner Dave Jones. "My order reduces State Farm rates an average of 7 percent, saving consumers $78.6 million annually and required refunds of more than $100 million in excessive rates collected since July 15, 2015. As California's insurance commissioner, protecting consumers from excessive rates continues as one of my highest priorities."
Whether a policyholder receives a decrease and the amount of the decrease depends on a number of factors, including the insured property's location and other individual risk characteristics and coverage features.
Since Jones took office in 2011, the department has processed nearly 40,000 property and casualty insurance rate filings under Proposition 103, the voter enacted rate regulation law. During this same period, the commissioner reduced the overall amount of requested rate increases by $1.093 billion and obtained over $1.562 billion in rate reductions from insurers, totaling over $2.655 billion in savings to California consumers and businesses. This total includes approximately $975 million in rate reductions for personal auto coverage and $616 million in rate reductions for personal homeowners' coverage.
- Consumer Federation and Consumer Watchdog, both consumer advocacy organizations, intervened and participated in the hearing held by the Department of Insurance.
- Contact Consumer Federation: Richard Holober
- Contact Consumer Watchdog: Carmen Balber 310-526-0746
- Decision and Order of the commissioner.
- Rate regulation in California applies to homeowners, auto, and other property and casualty insurance. Under Proposition 103, which was passed by California voters in 1988, insurers must obtain approval from the insurance commissioner before they increase or reduce rates. The insurance commissioner approves rates sufficient to cover claims costs, reasonable administrative expenses and a reasonable return for the insurance company. The commissioner has the authority to reject excessive property and casualty insurance rates. The State Legislature has so far declined to provide the authority to regulate health insurance rates.
- QBE reduced lender-placed homeowner rates by 35 percent
- American Assurance Insurance Company reduced lender-placed homeowner rates by 30.5 percent
- American Modern Home reduced lender-placed homeowner rates by 21.3 percent
- Great American Assurance Company reduced lender-placed homeowner rates by 28 percent
- Pacific Specialty Insurance reduced homeowner rates by 21.5 percent
- Unitrin Direct Property & Causality reduced homeowner rates by 14 percent
- Standard Fire Insurance reduced homeowner rates by 6.4 percent
- Travelers Property & Casualty Insurance reduced homeowner rates by 6.2 percent
- Universal North America Insurance reduced homeowner rates by 3.8 percent
- California Casualty Indemnity reduced automobile rates by 21.7 percent
- USAA General Indemnity reduced automobile rates by 20 percent
- Twin City Fire Insurance reduced automobile rates by 13 percent
- Hartford Underwriters Insurance reduced automobile rates by 8.4 percent
- Progressive West Insurance reduced automobile rates by 6.5 percent
- State Farm General Insurance average homeowner rate reduction by 8.5 percent
- USAA homeowner and condominium owner rate reduction by16.8 percent
- Allstate homeowner insurance rate reduction by 12.6 percent
- State Farm rental dwelling rate reduction by 40 percent
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.