Industry News

Safeco to slash homeowners’ insurance rates in California by 20%

Under pressure from state, four companies agree to rate reductions

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California Insurance Commissioner John Garamendi announced Thursday that Safeco is seeking a 20 percent reduction in homeowners' insurance rates. Safeco -- which the Department of Insurance says is the eighth-largest homeowners' insurer in the state -- is the fourth company to agree to slash homeowners' insurance rates under pressure from the state. In June, Garamendi ordered four insurers -- Safeco, State Farm Insurance, Allstate and Farmers -- to justify the rates they charged for homeowners' insurance, claiming the companies paid out far less in claims than they collected in premiums. A study commissioned by the state found that in 2005, State Farm paid 37.6 percent of each homeowner's insurance premium dollar for claims; Allstate paid 41 percent; Farmers paid 37.7 percent; and Safeco paid 26.31 percent. While State Farm and Safeco have agreed to reduce their rates, Allstate is seeking a 12.2 percent increase. Garamendi said Safeco's rate reduction would save consumers an averag...