State Farm Caught Red Handed; Consumer Watchdog Helps Small Biz Owners Save $7.8M in Insurance Costs.
From the California Business Journal newswire.
In response to Consumer Watchdog’s challenge to State Farm’s proposed rate increases on businesses’ liability and property insurance, State Farm has agreed to cut the average overall rates it charges wholesale, retail, and service businesses by 4.0% and agreed to not raise the rates paid by professional offices.
As a result of Consumer Watchdog’s efforts, over 80,000 policyholders will save $7.8 million as compared to the rates originally requested by State Farm.
State Farm initially proposed average overall rate hikes of 5% for wholesale, retail, and service businesses, like barbershops and books stores, and 5.5% for professional offices, like accountants and real estate agents. However, Consumer Watchdog analyzed State Farm’s data and found several errors with State Farm’s methodology, including over-projecting costs for catastrophes like wildfires and improperly estimating insurance losses and premium revenue. On April 20, 2016, Consumer Watchdog challenged the proposed rate hikes under the voter-passed insurance reform initiative, Proposition 103, and urged State Farm to decrease its rates.
In response, State Farm agreed to not hike rates for professional offices, and the California Department of Insurance has approved the 4.0% overall rate decrease for wholesale, retail, and service businesses, resulting in the $7.8 million savings. Qualifying policyholders who purchase a new policy or renew an existing one after November 15, 2016 will be eligible for these savings.