State Farm to cut homeowners insurance rates in Los Angeles
Thousands of Los Angeles homeowners covered by State Farm General Insurance Co. will see their annual premiums drop an average of $102, or 12.3%, beginning April 15.
The reduction is part of a statewide markdown that will benefit 85% of State Farm’s 1.6 million homeowner customers in California, the company said.
The lower prices are expected to be announced at a 10:30 a.m. news conference in Los Angeles held by state Insurance Commissioner Dave Jones and State Farm Chief Executive Tom Conley.
State Farm is California’s biggest insurer of homeowners.
“State Farm is demonstrating that insurers can serve customers well and operate profitably at the same time,” Jones said in a statement released before the news conference. “As the economy continues to recover, this rate reduction will no doubt alleviate some of the financial burden many homeowners are experiencing.”
Rates also are pegged to go down in other key California cities: 12.4% in San Diego, 21% in Sacramento and 8.5% in San Francisco.
Jones approved the rate reduction using the regulatory powers given the commissioner by Proposition 103, an initiative approved by California voters in 1988.
As part of the State Farm rate filing, Jones also endorsed a new rate-setting system the company developed to better match price with risk.
Improved underwriting helps State Farm provide competitively priced coverage to its policyholders, Conley said.
State Farm’s rate reduction follows a 6.9% increase in January 2009 and a 6.9% hike in February 2010, the company said.
The development of the new rating system and the latest rate reductions are proof that California’s mechanism for regulating property and casualty insurance rates works the way it’s supposed to, said Douglas Heller, a senior advocate with Consumer Watchdog. The Santa Monica advocacy group participated in the State Farm rate-setting process.
“Insurance rate regulation works,” he said, “and we have $160 million more to prove it.”
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