SANTA MONICA, Calif., June 21, 2017 /PRNewswire-USNewswire/ -- Consumer Watchdog has filed a petition challenging the insurance rates that two companies in the Travelers Group want to charge small businesses. The group is seeking a 20% cut to the rates Travelers currently charges, which would deliver about $20 million in savings to policyholders.
Travelers' rate proposal would affect nearly 16,000 businesses in the companies' Master Pac program that provides liability and property coverage for small businesses such as barber shops, pet sitters, employment agencies, speech therapists, and car washes.
"It's hard enough for California's small business owners to succeed without getting overcharged for the insurance they need to protect their livelihood," said Consumer Watchdog staff attorney Jonathan Phenix. "Insurance reform Proposition 103 ensures that companies like Travelers do not charge more than what is fair and justified."
Under Proposition 103, insurance companies are barred from charging excessive auto, home and business rates. The voter-approved measure also authorizes consumers to challenge illegal rates and other insurance practices. This system has saved California policyholders over $100 billion since it took effect in 1989, according to the Consumer Federation of America. As a recent LA Daily News article noted http://www.dailynews.com/opinion/20170619/money-saving-prop-103-beats-back-another-challenge-thomas-elias, Proposition 103 saves "consumers and businesses about 20 percent of what they would otherwise spend on car insurance and property coverage."
In this case, Travelers requested an overall rate decrease of -4.4%. However, Travelers' own data show that an overall rate decrease of at least -20% is warranted. Consumer Watchdog's petition alleges that Travelers' rate decrease proposal does not go far enough and would result in excessive rates.
Among other things, Consumer Watchdog's actuarial analysis found evidence that Travelers over-projected insurance losses and under-projected premium growth. Additionally, Travelers' ratio of the amount of claims it paid to policyholders compared to premiums earned – an industry indicator of underwriting profitability – showed the company should be making much deeper rate cuts: In 2016, for example, Travelers paid out 37 cents in claims for every dollar of premium it collected.
Travelers may respond to Consumer Watchdog's petition within 5 days. If the insurance company refuses to lower its rates to reasonable levels, the Insurance Commissioner is required by law to hold a hearing on Consumer Watchdog's challenge.
For a copy of Consumer Watchdog's request for a hearing, click here: http://www.consumerwatchdog.org/sites/default/files/resources/2017-06-19_cwd_petition_for_hearing_petition_to_intervene_and_notice_of_intent_to_seek_compensation.pdf
To read more about Proposition 103, click here: http://www.consumerwatchdog.org/focusarea/prop-103-california-insurance-reform
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SOURCE Consumer Watchdog