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Jul 18, 2003
CONTACT: Pam Pressley 310-392-0522 x307 or Doug Heller 310-392-0522 x309
Consumer Group Blocks Safeco's 19.7% Homeowners Insurance Rate Hike
230,000 California Homeowners' Will Be Spared $132 Average Premium Increase by California's 6th Largest InsurerSanta Monica, CA -- Safeco Insurance Company, the sixth largest homeowners' insurer in the state, has withdrawn a plan to hike homeowners' insurance rates by 19.7% after the Foundation for Taxpayer and Consumer Rights (FTCR) challenged the proposed increase. Proposition 103 allows consumers to challenge proposed insurance rate hikes before the increases can take effect. The cancelled hike would have increased Safeco policyholders premiums by $132 annually, on average.
"We cannot allow insurance companies to raise policyholder rates every time they face weak quarterly earnings," stated Pamela Pressley, staff attorney for FTCR. "Safeco and other insurers will face public scrutiny when they push for massive and repeated rate hikes. We are pleased Safeco has recognized this and withdrawn this proposed hike."
Safeco, with its California headquarters in Oakland, filed an application for its 19.7% requested rate increase on May 8, 2003. This was its fifth rate hike request in just the last three years. Safeco's most recently approved rate hikes include: a 6.2% rate increase effective in May 2003, 10% in November 2002, and 5% in December 2001.
FTCR reviewed Safeco's application with national experts and requested a hearing pursuant to Prop. 103, which allows members of the public to challenge rate increases. Under that law, the California Department of Insurance (CDI) must grant a hearing for a challenge to any increase above 7% for personal lines of insurance, including auto and homeowners (or 15% for commercial lines). FTCR filed its petition for a hearing on Safeco's rate hike application with the CDI on July 3, 2003. The CDI had not yet issued a decision granting FTCR's petition when Safeco withdrew its request on July 16.
"The $30 million Safeco wanted to add to California homeowners insurance premiums was unjustified, especially in light of the fact that Safeco has already hiked its rates a total of 21.2% in just the last year and a half," said Pressley. "Other companies should take note and realize that they cannot continue to take repeated bites of the apple and hope consumers will sit back and not do anything about it."
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