Insurance Commissioner obtains State Farm agreement to reduce rental dwelling insurance rates
News: 2016 Press Release
SACRAMENTO, Calif. — Insurance Commissioner Dave Jones today announced that he has obtained an agreement from State Farm General Insurance Company to reduce their insurer's Rental Dwelling Program policyholders' rates statewide by an average of 40 percent, effective February 1, 2017. This reduction will result in an estimated $101.1 million savings to rental property owners and small business people, with an average savings to individual policyholders of $359 annually.
"This is good news for the approximately 200,000 State Farm Rental Dwelling policyholders, most of whom will receive a rate reduction as a result," said Commissioner Jones. "Thanks to our review and conclusion that the rates as first proposed were excessive, we have obtained from State Farm a record reduction that will enable small businesses and other rental property owners to keep more of their hard earned money."
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 get approval from the insurance commissioner before they may 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.
Whether a policyholder receives a decrease and the amount of the decrease depends on a number of factors, including the location of the insured property, 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.
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- Consumer Watchdog, a consumer advocacy organization, intervened and participated in the negotiations led by the Department of Insurance with State Farm.
- Settlement stipulation is available to the public.
- Rate reductions obtained by Commissioner Jones since 2011:
- 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 by 16.8 percent
- Allstate homeowner insurance rate reduction by 12.6 percent
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.