Allstate is seeking an increase in its California homeowners insurance premiums by an average of 34%.
According to the California Department of Insurance, the Allstate homeowners filing was received by the Department on April 14, 2023. The initial rate request was 39.6%. Consumer Watchdog petitioned to intervene in July 2023. In January of this year, Allstate amended their rate request to 34.1%. According to a reports, it would be the largest rate increase this year and would impact more than 350,000 policyholders.
“This is a complicated rate filing where Allstate is switching complex wildfire models and introducing its wildfire mitigation discounts in compliance with the commissioner’s Safer From Wildfires regulation,” a CDI statement reads. “The rate filing is currently under review by the Department.”
The state’s insurance commissioner and other stakeholders have responded to a growing crisis in the state’s insurance market, one that seems to be driven in part by consecutive severe wildfire seasons in California, with myriad proposals. Modeling could be used in ratemaking under a proposal being considered by Insurance Commissioner Ricardo Lara, which is being supported by the insurance industry. It is among several steps proposed to help the state’s homeowners insurance crisis, which includes expedited rate filings and enabling insurers to factor reinsurance costs into rates.
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California’s largest insurer, State Farm, recently notified California’s Department of Insurance to allow them to hike home insurance rates for millions of residents, or they will drop coverage of many insured. The request comes amid the state’s ongoing insurance crisis as coverage costs increase.
Several insurers, such as Allstate, Farmers Direct, and State Farm, have limited coverage or stopped conducting business entirely in the Golden State, citing the growing risks of climate disasters. In turn, over 50% of all Californians believe they have been affected by climbing property prices or dropped by their insurer in the last year. Applying with a new provider also becomes challenging, with few firms offering coverage.
State Farm seeks to raise prices by 30% for homeowners, 36% for condo owners, and 52% for renters. According to Insurance Commissioner Ricardo Lara, the high cost “has the potential to affect millions of California consumers and the integrity of our residential property insurance market,” adding that he will “get to the bottom” of the firm’s financial status and carry out a comprehensive evaluation before deciding on the applications.
“State Farm General’s latest rate filings raise serious questions about its financial condition,” Lara added. He highlighted that a rate hearing could be necessary to understand the public’s view on the proposed rate changes before officials decide on the rate hike requests, which could take months. The department is averaging 180 days per rate review, a spokesperson told the LA Times. The long duration could be due to the massive fires in the state in recent years.