SAN DIEGO — Allstate is looking to raise rates on homeowners insurance in California by an average of 34.1%.
Right now, the Department of Insurance is reviewing their request.
If approved, it would be the largest rate increase so far this year and impact more than 350,000 policyholders.
"It doesn't surprise me to see Allstate taking some significant rates right now, because they are way behind the eight ball as far as the industry is concerned," said Karl Susman, an insurance agency owner and industry expert.
Susman says Allstate's request to raise rates by an average of 34.1% is to be expected amid a rise in policies elsewhere.
Allstate told CBS 8 it's needed due to higher repair costs, more frequent and severe weather and legal system abuse.
But theirs is the highest so far this year, surpassing State Farm's request last month for a 30% hike.
While that's a tough pill to swallow, Susman said it won't impact all policy holders the same across the board.
"That doesn't mean that every Allstate client is going to be getting a 34.1% increase. What it means is there's a range. Some people are going to get a deduction, meaning that their premium is going to go down by up to 57% all the way up to a plus, believe it or not, 647%. Now, that high end could be one policy, right? We don't know, but the overall weighted average of the affected policies is about plus 34," said Susman.
Per state law, Allstate needs to get approval from the Department of Insurance, which could take several months.
In a statement to CBS 8, a department spokesperson said:
"The Department of Insurance’s top priority is to protect consumers. Under Prop. 103, insurance rates must be justified to ensure policyholders do not pay any premiums that are excessive.
Also under Prop. 103, insurance companies are not required to write policies. However, one major component of the Commissioner’s Sustainable Insurance Strategy is securing commitments from insurance companies to write new and expanded coverage in more areas of our state, especially in wildfire distressed areas.
As with all rate filings, the Department of Insurance’s experts will review all of the relevant data and make fact-based decisions under the guidelines of Prop. 103 to keep insurance fair and available for all Californians.
The Allstate homeowners filing was received by the Department on April 14, 2023, and included on the May 19, 2023 Public Notice. Their 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%.
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. The rate filing is currently under review by the Department."
In 2022, Allstate stopped writing new policies in California, but indicated they would start up again once new state regulations are put in place.
Susman said once that happens, more carriers will come back to California and rates will go down.
So, while a rate increase request may be jarring, Susman said don't shop around just yet, wait it out.
"Stand by, hold on tight. Know that you're not going to be seeing your bill increase tomorrow. And hopefully, by the end of the year, when the Department of Insurance has their new guidelines coming out and we see the market reopen, it'll be moot, because you'll have options to go to," said Susman.
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