Allstate seeks homeowners hike
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home / insurance / in the media

Orange County Register
Jan 01, 2002

by JAMES B. KELLEHER

Allstate seeks homeowners hike

A 22.3% raise, the firm's first since 1994, is considered by regulators.
More than 50,000 Orange County customers of Allstate Insurance will see the premiums they pay for homeowners insurance jump 22.3 percent next year if state regulators approve the insurer's request for a rate hike.

The proposed increase, the first from Allstate since 1994, would raise the average annual premium for the company's almost 900,000 California customers to $739 from $605 -- or about $11 a month in extra payments.

Allstate, which will have to convince regulators to sign off on the increase, said several factors made the hike necessary, including rising construction costs, a jump in weather-related claims and an increase in fraud losses.

The insurer also pointed out that after eight years of steady rates, an increase was not out of order.

It's been quite awhile,'' said Allstate spokeswoman Lisa Wannamaker.

The proposed hike follows a 6.9 percent increase earlier this week from State Farm, the largest home insurer in California. State Farm said the change, its second this year, is justified by rising claims.

State Farm's increase followed a similar 6.9 percent hike from Farmers Insurance last summer.

But industry watchdogs, such as Pam Pressley at the Foundation for Taxpayer and Consumer Rights, worry insurers may be gouging ratepayers to bolster profits hurt by the terror attacks and the economic slowdown.

The foundation has asked the Department of Insurance, which approves rates, to freeze them until a mechanism is set up to make it easier for the public to verify insurers' claims of rising costs.

Scott Edelen, a deputy commissioner, defended the department's handling of the requests and said the Allstate proposal would be scrutinized to make sure it was fully justified.

We examine each and every rate application thoroughly,'' Edelen said.

Pressley also worried that some insurers are circumventing a rule established by Proposition 103, the insurance reform initiative, that requires public hearings on increases larger than 7 percent.

To avoid such hearings, insurers keep requests below the threshold -- but submit more than one a year, she said.





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