California homeowners' insurance companies may be making "excess profits," because their payments on claims have dwindled in the past two years while the money they keep has "soared," according to a report released today by the state's insurance commissioner. Beginning in 2004, loss ratios – the amount an insurer spends to pay the claims of its customers, as expressed as a percentage of its premiums – for homeowners' insurers dropped "markedly," according to the study commissioned by California Insurance Commissioner John Garamendi. The study also addressed auto insurance. The commissioner said he would hold a rate reduction hearing July 20 to determine whether some of the rates consumers are paying are excessive and whether homeowners' and auto insurers should be ordered to lower their rates. "Only four (homeowners' insurance) companies reported loss ratios exceeding 50 percent in 2004, and only five companies were in this category by the end of 2005," Garamen...
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