Consumer Watchdog Alleges Farmers Insurance of Over Charging Customers, Petitions Against Rate Hikes

SANTA MONICA, CA — Santa Monica-based Consumer Watchdog filed a petition Tuesday with the California Department of Insurance to stop Farmers Insurance from increasing its rates by nearly 7 percent. The proposed increase would affect more than 1.2 million customers.

The proposed rate hike for customers with Farmers Insurance Exchange, Fire Insurance Exchange, and Mid-Century Insurance Company would cost consumers $78 Million, according to Consumer Watchdog.

Consumer Watchdog's petition alleges that Farmers failed to justify the proposed rate increase as required by the voter-approved insurance reform law, Proposition 103. According to the group, Farmers was over projecting insurance losses, leading to high-than-necessary rates for consumers. The group also accused Farmers to paying itself nearly $2 billion for management fees and passing the costs to policyholders.

"Most people don't even have a choice about whether to buy renters or homeowners insurance," Consumer Watchdog staff attorney Jonathan Phenix said. "Most mortgage lenders require homeowners insurance. Landlords have increasingly required renters insurance. Proposition 103 is critical to protecting the millions of consumers who must buy insurance from unjustified rate hikes like the one Farmers proposes here."

Under Proposition 103, insurance companies must justify the auto, home and business insurance rates they charge to consumers, and consumers have the right to request a public hearing to challenge rates.

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