SANTA MONICA, Calif., Aug. 24, 2016 /PRNewswire-USNewswire/ -- Following Consumer Watchdog's petition for a hearing on Commerce West's application to increase its auto insurance policyholders' rates by 12% overall, the company has withdrawn its requested rate hike, saving California drivers over $8.2 million.
Consumer Watchdog's petition alleged, among other things, that Commerce West improperly projected its insurance losses and its premium income, which would have resulted in excessive rates if implemented. The withdrawal of Commerce West's proposed rate hike will benefit 39,000 California auto insurance policyholders.
"Proposition 103 prevents insurers from making excessive profits by inflating the rates they charge to consumers. Rather than face a public hearing to justify its proposed $8.2 million increase, Commerce West withdrew its rate hike in response to Consumer Watchdog's petition under Prop 103," said Consumer Watchdog staff attorney Jonathan Phenix.
Under the voter-approved Proposition 103, insurance companies like Commerce West must justify the auto, home and business insurance rates they charge to consumers, and consumers have the right to request a public hearing before the Department of Insurance to challenge rates. If a proposed rate hike exceeds 7% in personal lines of insurance like auto and homeowners, a hearing must be held in response to a consumer request.
Commerce West is among California's top 50 largest automobile insurers. It is a California-based affiliate of MAPFRE Insurance Group, which earned nearly $122 million in premiums from its private passenger auto insurance business in California in 2015.
Yesterday, Consumer Watchdog and the California Department of Insurance announced additional savings for California large and small business owners under Proposition 103 after a challenge to an excessive rate proposal by State Farm. The insurer has agreed to cut the average overall rates it charges wholesale, retail, and service businesses by 4.0% and agreed to not raise the rates paid by professional offices. As a result of Consumer Watchdog's efforts, over 80,000 policyholders will save $7.8 million as compared to the rates originally requested by State Farm.
Consumer Watchdog is a non-profit non-partisan organization. It has used the public participation process under Proposition 103 to save auto, home and medical malpractice insurance policyholders over $3 billion since 2003. Proposition 103 has saved motorists alone over $100 billion since its passage in 1988, according to a 2013 report by the Consumer Federation of America.
SOURCE Consumer Watchdog