Proposition 103 Rate Regulation Leads to $160 Million Homeowners Insurance Rate Cut by State Farm
State Farm, Department of Insurance, and Consumer Watchdog Agree to Pricing Changes Resulting in an Overall 12.6% Rate Cut for More than a Million Cal. Homeowners and Renters
LOS ANGELES, Feb. 7, 2013 /PRNewswire-USNewswire/ -- Insurance Commissioner Dave Jones, State Farm and Consumer Watchdog jointly announced a $160 million rate cut for State Farm's California homeowners insurance policyholders at a news conference today. More than a million homeowners and approximately 250,000 renters throughout California will see their premiums lowered when their policy next renews.
Using the public participation rules created by California's insurance reform law, Proposition 103, Consumer Watchdog challenged an original proposal by State Farm that would have left premiums higher than necessary. In California, citizens have the power to scrutinize insurance rate proposals and bring in their own experts to ensure that companies can justify their rates. Working with Consumer Watchdog and the Department of Insurance, State Farm agreed to implement a 12.6% overall rate cut for its policies covering homes, condominiums and apartments in California.
"Twenty five years ago, California voters enacted Proposition 103 to make insurance fairer and more affordable in our state, and that initiative has saved consumers and businesses billions of dollars," said consumer advocate Douglas Heller of the nonprofit Consumer Watchdog. "Today, those reforms are putting $160 million back in the pockets of Californians."
Companies that play by the rules can be successful in this marketplace, and consumers are better protected from excessive insurance rates in California than anywhere else in the country, according to Consumer Watchdog. The group noted, however, that these regulatory protections do not yet apply to health insurance rates in California, which have been skyrocketing for a decade. Consumer Watchdog Campaign, an affiliated nonprofit, is sponsoring an initiative that will be on the November 2014 ballot to apply these same insurance reform measures to companies selling health insurance policies in California.
"We have a system that is very good at keeping home and auto insurance premiums in check, but we have no way to stop health insurance companies from gouging Californians," said Heller. "Health insurance companies deserve at least as much scrutiny as other insurers face in California."
- Allows the Insurance Commissioner to ensure that the premiums Californians pay for home, auto and business insurance are appropriate and justified and to deny rate plans that are excessive;
- Requires insurance companies to open up their books to public review; and
- Gives consumers and consumer groups the power to challenge insurance companies that try to keep rates too high.
Consumer Watchdog noted that approximately 85% of State Farm customers will see a premium decrease or no change in their rates but about 15% will see a small increase. As a result of the work of Department of Insurance staff and Consumer Watchdog, State Farm's new pricing system will have a limited impact on most of those policyholders who do face an increase, Consumer Watchdog said. The group added that those receiving premium decreases vastly outnumber those facing increases, with about one million homeowners, 250,000 renters and 100,000 condominium owners seeing lower premiums as a result of this agreement.
Consumer Watchdog has used the public participation process under Proposition 103 to save auto, home and medical malpractice insurance policyholders $2.3 billion since 2003.
Visit our website at: http://www.ConsumerWatchdog.org
SOURCE Consumer Watchdog