Department of Insurance approves 34% rate increase for Allstate impacting 350,000 homeowners

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CALIFORNIA – The California Department of Insurance (CDI) approved a 34.1% rate increase, August 8, impacting 350,000 Allstate homeowners insurance policies.

Allstate initially requested a 39.6% increase in April 2023, however Consumer Watchdog challenged the rate hike as excessive under Prop 103.

“After the company provided further information and pushed the effective date to November 2024, resulting in increased loss projections, the proposed 34.1% was justified under the regulations,” says a statement on The Consumer Watchdog website.

The rate increase will go into effect November 7, 2024.

Consumers can search for all rate increase filings on the CDI website by clicking here.

Wildfire risk scores

Consumer Watchdog says as a part of their negotiations, Allstate also agreed to improve its explanation to consumers about the impact their wildfire risk scores have on their premiums.

They say going forward, Allstate will include in its notifications to consumers the dollar amount of premium attributable to customers’ wildfire scores.

Allstate’s proposed wildfire rating factors were developed using ZestyAI’s “Z-FIRE Model,” a computer model created to predict future losses based on a property’s vulnerability to wildfire.

Insurance Commissioner Ricardo Lara says proposed regulations will allow insurance companies to use AI catastrophe models to predict future losses under the condition they insure more homes in wildfire risk areas.

Virtual Public Hearing

E&E News found that the cost of some homeowner insurance policies in Florida have risen from $1,500 to $9,000 annually since factoring in climate change risks.

“California is in danger of becoming Florida with these changes that mimic the failed strategies in Florida. Lara has given into the industry’s demands and the consumers are going to be paying the bills for a long time unless he is stopped,” said Consumer Watchdog President Jamie Court.

A virtual public hearing, September 17, 2024, will take place at 10 a.m. to discuss new catastrophe modeling regulations to set rates. For more information click here.

The public can also submit a comment via email to CDIRegulations@insurance.ca.gov

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