24 July 2011

GEICO will Lower California Automobile Insurance Rates august 2011

Pakar Info - GEICO will Lower California Automobile Insurance Rates august 2011 : Starting next month, GEICO will begin implementing a10.7% overall rate decrease for its California automobile insurance policyholders. GEICO originally asked the California Department of Insurance (CDI) for a 4% increase to its automobile insurance rates, but the nonprofit Consumer Watchdog challenged the hike. In California, auto insurance rates are subject to Proposition 103, which prohibits insurers from charging excessive rates and allows citizens to challenge excessive rates. After a review by the CDI and Consumer Watchdog, GEICO agreed to lower rates instead, resulting in an average saving of $127 per year for more than 700,000 California drivers.

During the rate review, Consumer Watchdog determined that GEICO was improperly estimating its future claims and seeking waivers of the rules for calculating its rates without meeting the requirements for obtaining such waivers. Subsequently, GEICO withdrew its requested increase and re-filed its application, requesting an 8.5% rate decrease. In June of this year, the CDI, GEICO and Consumer Watchdog agreed to the 10.7% decrease, which amounts to a savings of $91 million annually for GEICO customers. Additionally, GEICO agreed to return to CDI in 18 months to subject its rates to another review.

This massive decrease is a substantial victory for California's consumers. Not only will GEICO be decreasing its rates by $91 million per year, but the agreed upon reduction is actually $125 million less than the increased rates GEICO originally requested and Consumer Watchdog challenged. This kind of turnaround is exactly why Proposition 103 gave consumers the right to challenge proposed insurance rates, said Todd M. Foreman, Consumer Watchdog staff attorney.

The consumer protections afforded to drivers, homeowners and other property and casualty insurance policyholders by Proposition 103 do not apply to Californians' health insurance policies, Consumer Watchdog noted.

Legislation pending in the California State Senate, AB 52 (Feuer), would create similar regulatory oversight of health insurance companies and could save Californians billions of dollars, the group said.

"Assembly Bill 52, which recently passed out of the Senate Health Committee, will provide the same type of check on skyrocketing health insurance rates that Proposition 103 places on auto insurance," said Douglas Heller, executive director of Consumer Watchdog. "Patients would love to get the news that their health insurer has agreed to lower rates by 10%, instead of the massive hike after hike that Californians now endure. It is crucial that lawmakers considering AB 52 maintain the protections that have proved so effective for motorists since voters passed Prop 103 in 1988. Health insurance companies are pushing aggressively in Sacramento to take the teeth out of reform, but Californians desperately need lawmakers to resist the insurance lobby."

From its passage in 1988 through 2006, Proposition 103 saved California drivers more than $62 billion on their auto insurance, according to a 2008 study by the Consumer Federation of America.


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