Consumer Watchdog, General Insurance Company of America, and the California Department of Insurance have reached a settlement regarding General’s application for a 7.33% rate increase on its homeowners insurance line.
The advocacy group says that the agreement is expected to save California policyholders a total of $25 million.
General initially applied for a 13.7% rate increase, which Consumer Watchdog challenged under Proposition 103 and state ratemaking regulations. These rules require insurers to justify any proposed rate changes before they are approved or implemented.
Consumer Watchdog said that it specifically disputed the trend selections used in General’s rate filing, claiming the projections overstated anticipated losses, which contributed to an inflated rate indication.
Consumer Watchdog staff attorney Benjamin Powell (pictured above) said public participation is an important part of ensuring that insurers do not implement excessive rate increases, adding that the case demonstrates how consumers can benefit when proposed rate hikes are scrutinized and challenged.
The settlement marks another victory for the consumer advocacy group against proposed insurance rate hikes. In November, Consumer Watchdog also successfully contested proposed double-digit rate increases by 21st Century Insurance Company (auto policies), United Services Automobile Association (USAA) (homeowners, renters, and condo policies), and Liberty Insurance Corporation (homeowners policies).
Consumer Watchdog said that these efforts resulted in savings exceeding $53 million for policyholders.
As part of the process in this latest settlement, Consumer Watchdog requested additional data and documentation from General to support its projected losses and other assumptions in the filing.
After several rounds of questions, the review process concluded that a lower rate increase of 7.4% would be justified. The newly approved 7.33% rate increase is scheduled to take effect on 28 May 2025 and will apply to more than 200,000 policyholders.
Proposition 103, passed by California voters in 1988, requires insurers to open their records and demonstrate the need for any rate increases. The law also allows consumer representatives to review proposed rates and challenge those deemed excessive or unfair.
According to the Consumer Federation of America, Proposition 103 has saved California drivers over $154 billion since 1989. Consumer Watchdog reports that its own efforts challenging auto, home, business, and medical malpractice rates have saved California consumers over $6.5 billion in the past 22 years.
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