Gas prices are sky high, food prices are soaring, and American consumers face the possibility of across-the-board inflation. But in California, elected Insurance Commissioner Steve Poizner not only rejected a proposed 9.3% homeowners' rate increase from Allstate, but ordered the company to cut its rates by up to 28.5%!
For those keeping score, that's an estimated $255 million in savings.
""In today's sputtering economic environment, people need all the help they can get just to pay the bills," Insurance Commissioner Steve Poizner said in a statement.
. . .
He ordered the rate reduction after an administrative judge recommended the cut. Consumers will save an average of $242 per policy on an annual basis, according to the statement."
And this comes on top of an earlier Poizner order for Allstate to cut its car insurance rates by 15.9%. Proposition 103, passed in 1988, requires insurers to secure prior approval of all rate changes from the state insurance commissioner. In this case, the commissioner was able not just to protect California consumers from this ill-timed price hike, but force a massive rollback on prices.
Yet that's still not all of it! A California regulatory proceeding, spurred on by consumer advocates Consumer Watchdog, will soon determine if Allstate owes policyholders hundreds of dollars in overcharges from recent years - citing the company's record profits and dishonest rate hikes.
The outlook for rates in Illinois? Not quite so rosy.
Allstate, the state's second-largest insurer and one that hasn't been cutting prices, last month filed with Illinois regulators to hike rates on home and auto policies this spring. Most Allstate homeowners' policyholders will see an 11% increase effective May 26, while some with Allstate auto policies will get a 10% bump beginning April 24. The auto hike is on top of a 10% jump last summer.
No wonder Illinois is the insurance companies' favorite state. With no power to curb these rate hikes, the state can only watch as Allstate and others put more and more pressure on already challenged Illinois consumers. So while your rates go up this summer, remember that in the 20 years since Proposition 103 passed, Consumer Watchdog says California comsumers have saved close to $62 Billion.
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