Insurance giant Allstate has been ordered to cut its homeowner insurance rates by more than 25 percent, which is estimated to save policyholders in California $255 million annually.
Allstate, which stopped writing new insurance policies in the state last July because of natural disasters like earthquakes and wildfires, had initially filed a request to raise rates by 9.3 percent for existing customers.
But California Insurance Commissioner Steve Poizner shot back with a 28.5 percent rollback in prices, which should save the average homeowner $242 per policy, per year.
“Gas prices are soaring, unemployment is on the rise and many Californians find it increasingly harder to simply pay their mortgage,” said Commissioner Poizner, in a statement. “In today’s sputtering economic environment, people need all the help they can get just to pay the bills.”
“That’s why I am pleased to order this tremendous rate cut today, which will save homeowners a quarter of a billion dollars on their insurance.”
Of course Allstate wasn’t all too pleased with the verdict, but begrudgingly complied with the order.
“While we are disappointed in this order, we respect the authority of the Department and will comply,” said Allstate Senior Corporate Relations Manager Peter DeMarco in a press release.
“We are reviewing the order in detail and communicating with the Department about the process for adjusting the rates of our 850,000 homeowners policyholders in the state.”
Shares of Allstate were off 55 cents, or 1.22%, to $44.35 in late trading on Wall Street Friday, near their 52-week low.
This is good news, as it will lower mortgage payments for struggling California homeowners.