The California Department of Insurance has issued a notice of noncompliance to the insurer.
California Insurance Commissioner Dave Jones ordered a State Farm insurance rate reduction in December 2016. The Department of Insurance has now issued a noncompliance notice to the insurer for failing to reduce premiums as mandated.
The insurance company was ordered to reduce renters and homeowners insurance rates by an average of 7 percent.
This State Farm insurance rate decrease would save consumers $84 million over the span of a year. Moreover, the insurance company was also required to issue over $110 million in total refunds to its policyholders.
State Farm previously requested a stay to the department’s order. That said, the San Diego Superior Court denied the insurer’s request on December 16, 2016. The court upheld the insurance commissioner’s mandate for State Farm to reduce its rates. The decision’s justification was that delaying renters and homeowners insurance rate reductions would be contrary to public interest.
As a result, State Farm insurance rate reductions were effective as of the December 8, 2016 order.
The State Farm insurance company has since informed California Department of Insurance staff members of intentions to delay rate reductions, regardless. The insurer’s intention is to execute the reduced premiums as of February 13, 2017. An additional 50 days is needed for the issuing of renewal notices, said the company, according to the department.
So far, State Farm has outright refused to lower new or renewal insurance policy rates from December 13, 2016 through February 13, 2017, said the department.
The insurance company issued a statement on the subject. “State Farm believes it is in full compliance with the California Department of Insurance rate making process,” it said. “We took immediate steps to comply with the rate reduction after receiving the ruling of the trial court over the weekend of December 16. The new reduced rates currently are and, after that weekend, have been included in outgoing renewal bills, which must be sent out by law at least 45 days in advance.”
The State Farm insurance rate issue began when the company requested a 6.9 percent increase from the department. Jones conducted an assessment of the justification for the rate increase. He decided that not only was an increase unjustified but that the insurer’s current rates were excessive. He ordered an average homeowners insurance rate reduction of 5.37 percent, an average renters insurance rate decrease of 20.39 percent and an average condominium insurance rate lowering of 13.81 percent. Overall, this reduces rates by 7 percent.