Allstate Ordered to Reduce California Auto Insurance Rates

One out of every ten cars in the state of California is insured by Allstate Corp. As you can imagine, the insurer earns quite a bit of money from drivers in this state alone. With that being said, things are set to change for Allstate in the near future. The company has been ordered by Insurance Commissioner Steve Poizner to reduce prices by 15.9 percent. This works out to approximately $124 per vehicle. While this is going to hurt Allstate, it is something that consumers are excited about; especially those who are currently insured through the company.

The new rate is set to go into effect on April 14, 2008. At this time, Allstate is trying to determine whether or not to appeal this rate hike.

Poizner said, "California's consumers deserve a competitive marketplace in which to shop around for the best rates that meet their needs. This reduction reaffirms my commitment to ensuring that excessive rates are not charged. At the same time, the rate reduction is fair and reasonable for the company.'

Allstate offered to cut rates by 7.1 percent. On the other side of things, the state's rate setting formula showed that a decrease of 19.4 percent would be fair to consumers. As you can see, the situation could have been much worse for the company.

Peter DeMarco, an Allstate spokesman said, "Suppressing one company's rates below the rest of the market is unfair to that company and not conducive to a healthy economy in California.'

It will be interesting to see if Allstate complies with this request, or decides to fight it in court.