The rate change, totaling $255 million, will lead to an average annual reduction of $243 for 850,000 homeowners throughout California. The revised policies will average about $600 per year, the Insurance Department estimated.
“A quarter-billion dollars is a significant decrease,” said Carmen Balber, spokeswoman for Consumer Watchdog, a consumers' rights organization that had pushed for a 30 percent rate cut. “It's a huge victory for consumers at a time when the price of everything else in this economy is going up.”
Although Allstate stopped issuing new homeowners policies in California in 2007, citing concerns about the state's wildfires and earthquakes, it still provides coverage under previously issued policies.
Yesterday's decision follows a 15.9 percent, $250 million rate reduction for Allstate auto policies in April, lowering car insurance policyholders annual payments by an average of $124.
The two rate reductions are by far the largest that have been ordered under Insurance Commissioner Steve Poizner, who has described Allstate's rates as “excessive.”
DeMarco said the company is reviewing the order in detail and communicating with the Insurance Department about the process of adjusting its rates.
“In today's sputtering economic environment, people need all the help they can get just to pay the bills,” Poizner said yesterday. “That's why I am pleased to order this tremendous rate cut.”
Allstate spokesman Peter DeMarco said that although the company was “disappointed” with Poizner's order, “we respect the authority of the (Insurance) Department and will comply.”