Garamendi Orders Insurers to Justify Rates

California Insurance Commissioner John Garamendi ordered four big insurers Wednesday to justify their home insurance rates, saying he would order cuts if the charges were found to be too high.

Garamendi said a Department of Insurance study found that the four companies -- State Farm, Allstate, Farmers and Safeco -- paid out in claims less than 50 cents of each premium dollar taken in last year. The four companies account for more than half of the insurance covering the state’s homeowners and renters.

Sam Sorich, president of the California Assn. of Insurance Companies, said that the current rates were approved by Garamendi and that rate cuts could leave insurers unable to pay claims triggered by a major earthquake or other disaster.