Allstate Now Increasing Home Insurance Rates in California by 34%
Allstate will raise home insurance rates in California by an average of 34.1% for about 350,000 customers, with some increases up to 650%, effective after November 7.
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Allstate has announced a significant increase in home insurance rates in California, with an average hike of 34.1% approved by the Department of Insurance for around 350,000 customers. This marks the largest rate increase among major insurers in the state since 2021. While some homeowners may see decreases of up to 57%, others could face increases as high as 650%. The new rates will take effect at the first renewal date after November 7. Allstate's spokesperson attributed the rate adjustments to rising home values, repair costs, and the increasing frequency of severe weather events. Additionally, the company has a pending request to raise rates for condominium insurance by an average of 30%. The Sustainable Insurance Strategy, which aims to reform pricing formulas and expedite rate adjustment approvals, is expected to be implemented by year-end. This strategy is part of a broader effort to address the insurance crisis in California, where insurers are legally allowed to raise rates but are not writing more policies. Experts believe that while California's average insurance costs remain lower than in many large states, increasing policy availability is essential for achieving affordability.
- Allstate's home insurance rates in California will increase by an average of 34.1%.
- The rate hike affects approximately 350,000 customers, with some facing increases up to 650%.
- The new rates will be effective from the first renewal date after November 7.
- A Sustainable Insurance Strategy is being developed to address the insurance crisis and improve policy availability.
- California's average insurance costs are still lower than many other large states.
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4 commentsThe 2017 and 2018 wildfire seasons wiped out nearly two times the combined underwriting profits for California homeowners’ insurers for the prior 26 years… it’s acceptable to have large losses in this business but you need to have years of gains to offset them. CA is the only state that doesn’t allow for consideration of reinsurance costs in ratemaking.
CA requires insurers to underwrite using historical data from the past 20 years (which doesn’t include housing growth in high-risk regions or increased fuel load following years of drought and poor fire suppression strategies) to determine catastrophe losses vs predictively modeled data incorporating climate change. It is the only state that disallows forward-looking models when pricing wildfire risk.
Until California does something to ensure that the prices of insurance reflect the risk (letting them use modern catastrophe models, letting them price in reinsurance, approving rate filings in a timely manner), insurers will continue non-renewing folks and pulling out of the state altogether. It filed the rate increase in April 2023 and was just approved. In the meantime, Allstate has not added a single new homeowner in the state.
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