[Sign Up Now] to Receive Our FREE Daily SCVTV-SCVNews Digest by E-Mail

SCVNews.com | Judge Orders State Farm to Cut Rates, Issue Refunds | 08-09-2016
Inside
Weather
Santa Clarita CA
Sunny
Sunny
101°F
 
Calendar
Today in
S.C.V. History
September 26
1876 - California oil industry born as CSO No. 4 in Pico Canyon becomes state's first commercially productive oil well [story]


departmentofinsurancecommissioner[Consumer Watchdog] – In a major victory for 1.7 million State Farm policyholders, an administrative law judge at the California Department of Insurance has:

* Determined that since at least July 15, 2015, State Farm’s premiums for homeowners insurance have been excessive, ordering the Company to refund policyholders at least $85 million for overcharges collected after July 15, 2015.

* Ordered that going forward, State Farm must decrease its homeowners insurance rates by 7.0%. This would save policyholders nearly $156 million per year.

California Insurance Commissioner Dave Jones, who must decide whether to approve the judge’s decision, has now ordered the judge to determine the proper amount of interest consumers should be paid for any illegal amounts State Farm collected in the past.

“In 1988, California voters passed Proposition 103 to end insurer price-gouging in California,” said lead trial counsel, Todd Foreman, of the Zohar Law Firm in Los Angeles. “Today’s ruling will put millions of dollars back into the pockets of overcharged consumers, demonstrating that consumers are only protected when insurance companies are forced to open their books and justify their rates.”

Under Proposition 103, insurance companies are barred from charging excessive auto, home and business rates. Companies are required to apply for and justify any rate changes before they take effect. The measure also authorizes consumers to request hearings to challenge illegal rates and other insurance practices, as Consumer Watchdog did here. This system has saved Californians over $100 billion since it took effect in 1989, according to a 2013 report by the Consumer Federation of America.

 

State Farm Pleads Poverty

On December 4, 2014, State Farm requested a $73 million increase, effective July 15, 2015, in its home and rental insurance rates. After analyzing the application, Consumer Watchdog concluded that State Farm’s rate increase was unjustified and that its current rates were excessive. It filed a challenge to State Farm’s request on January 1, 2015.

A hearing began before Administrative Law Judge John A. Larsen on November 16, 2015. In his 95 page ruling, Judge Larsen examined all of State Farm’s arguments, as well as evidence presented by experts from Consumer Watchdog and the Consumer Federation of California. State Farm argued that having to reduce its rates would violate its constitutional rights. In response, the consumer groups noted that State Farm had collected $12.22 billion in after-tax profits nationwide between 2010 and 2014 – in 2014 alone, State Farm raked in $4.6 billion in after-tax profits – and that cutting rates would impose no financial hardship. The groups also noted that State Farm had excluded about $105 million in investment returns made by the entire company and was improperly asking policyholders to make up this difference by paying higher rates. Judge Larsen agreed that State Farm’s rights were not violated and rejected State Farm’s proposal to hike rates; the judge criticized State Farm for failing to follow the rules governing excessive rates that all other insurers follow.

“Far from proving it deserved a rate increase, State Farm’s evidence showed that consumers are entitled to relief from the excessive rates they have had to pay for over a year,” said Jonathan Phenix, a staff attorney with Consumer Watchdog. “Simply citing to the Constitution when the evidence is against you, as State Farm did here, won’t carry the day when that evidence shows State Farm collects billions in profits every year.”

 

State Farm Tries to Hide Evidence from the Public

One of Proposition 103’s core reforms requires insurance companies to disclose to the public all the information submitted in support of an application to change their rates. Flouting this requirement, State Farm asked Judge Larsen to deviate from the formula used to calculate insurance rates and conceal from public scrutiny evidence that didn’t support State Farm’s argument. However, Judge Larsen declined to follow State Farm’s argument and found that Proposition 103’s sunshine provision guaranteed the public’s right to access to documents that support of a rate change. “[I]f cost and pricing information were required to be kept confidential as a trade secret,” Judge Larsen wrote, “little actuarial data in rate hearings would be left for the public to inspect. Such a result would undermine Proposition 103.”

“Insurance coverage is compulsory for most homeowners, so the question isn’t about whether consumers should buy insurance; it’s how much they will pay for that coverage,” said Harvey Rosenfield, the author of Proposition 103 and one of Consumer Watchdog’s lawyers in the case. “This is why the voters insisted that insurance companies and the Department of Insurance review rates in a transparent way, rather than behind closed doors like they used to. As today’s ruling recognizes, insurers must justify their rates to the public.”

 

State Farm’s History of Proposing Overcharges

This year alone, Consumer Watchdog has challenged two other excessive rate changes proposed by State Farm. In April, Consumer Watchdog challenged State Farm’s across-the-board rate hikes on small businesses after finding the insurer’s current rates for commercial property and liability insurance were excessive. And earlier this month, Consumer Watchdog alleged that State Farm will overcharge policyholders for insurance that covers dwellings occupied by tenants by as much as $100 million unless it cuts its current rates by up to 40%.

State Farm has a long history of proposing rates that later turned out to be unjustifiable. Since 2006, including the savings from today’s decision, Consumer Watchdog has saved California renters and homeowners with State Farm insurance more than $749 million by challenging State Farm’s excessive rate proposals.

History of State Farm’s Rate Changes in Homeowners Insurance

Year

Rate Changes Proposed (Overall)

Rate Changes Implemented (Overall)

Savings to State Farm Policyholders

2006

0%

-20%

$266 million

2011

0%

-12.6%

$157 million

2013

6.9%

-1.2%

$86 million

2016

6.9%

-7.0%

$235 million

In the current proceeding involving State Farm’s homeowners rates, Insurance Commissioner Dave Jones has asked that Judge Larsen consider how much interest, if any, consumers should get along with their refunds. Once Judge Larsen makes this finding, Commissioner Jones will then decide whether to approve the ruling issued by Judge Larsen. State Farm has already said it will appeal an adverse ruling.

Read the Administrative Law Judge’s decision and the Commissioner’s August 8, 2016 order regarding calculation of interest rates on the refunds:http://www.consumerwatchdog.org/resources/noticeofnonadoptionofpd.pdf

Read Consumer Watchdog’s April 11, 2016 brief in support of rate refunds and decreases for State Farm’s customers: http://www.consumerwatchdog.org/resources/4-11-16cwdopeningbriefpublicredacted.pdf

Read more about Proposition 103: http://www.consumerwatchdog.org/focusarea/prop-103-california-insurance-reform

 

About Consumer Watchdog and Zohar Law Firm, P.C.

Consumer Watchdog is a non-profit non-partisan organization.  It has invoked the public participation process under Proposition 103 to save auto, home and medical malpractice insurance policyholders over $3 billion since 2003.

Consumer Watchdog’s trial counsel in this proceeding are Todd Foreman and Daniel Y. Zohar of the Zohar Law Firm, P.C. in Los Angeles. The Zohar Law Firm has achieved landmark successes in prior rate hearings, saving consumers hundreds of millions of dollars, and also handles business and entertainment litigation throughoutCalifornia.

Comment On This Story
COMMENT POLICY: We welcome comments from individuals and businesses. All comments are moderated. Comments are subject to rejection if they are vulgar, combative, or in poor taste.
REAL NAMES ONLY: All posters must use their real individual or business name. This applies equally to Twitter account holders who use a nickname.

9 Comments

  1. Theresa McGrath Cowdray

  2. chuck dimes says:

    Don’t mess with the Zohar

  3. Dee says:

    When will I get our refund plus interest!

Leave a Comment


LOCAL BUSINESS LINKS
LOCAL BUSINESS HEADLINES
FINANCIALS OF LOCAL INTEREST
MARKETS & METALS
NASDAQ5257.49  chart -0.91%
S&P 5002146.10  chart -0.86%
STOCKS OF LOCAL INTEREST
Bank Santa Clarita11.30  chart +0.00%
Biosolar, Inc.0.09  chart -10.00%
Sierra Bancorp18.07  chart -3.01%
Cu Bancorp (ca)24.05  chart -1.56%
Enable Ipc Corp0.0007  chart -53.33%
Flextronics International Ltd.13.60  chart +0.22%
Linn Energy Llc Unit Repstg Ltd0.0491  chart -1.80%
Linn Co Llc Com Shs Repstg Ltd 0.051  chart +0.00%
Mannkind Corporation0.5707  chart -7.13%
Mission Vly Bcp Ca7.99  chart +0.00%
Quest Diagnostics Incorporated 84.61  chart -0.97%
Tejon Ranch Co Common Stock23.95  chart -3.23%
Us Energy Initiative0.0004  chart +0.00%
Wesco Aircraft Holdings, Inc. C13.47  chart -0.07%

Apple Inc.112.88  chart +0.15%
At&t Inc.41.14  chart -0.34%
Autonation, Inc. Common Stock47.82  chart -1.46%
Best Buy Co., Inc. Common Stock37.51  chart -1.26%
Big Lots, Inc. Common Stock46.22  chart -0.60%
Barnes & Noble, Inc. Common Sto10.96  chart -0.18%
Brady Corporation Common Stock34.75  chart -0.94%
Boston Scientific Corporation C23.73  chart +0.08%
N/a24  chart +0.00%
Cbre Group Inc Common Stock Cla28.27  chart -2.99%
Carnival Corporation Common Sto46.47  chart -1.67%
Comcast Corporation65.81  chart -2.00%
Costco Wholesale Corporation151.19  chart -0.88%
Curtiss-wright Corporation Comm88.52  chart +0.14%
Cvs Health Corporation Common S89.92  chart -0.75%
Cemex, S.a.b. De C.v. Sponsored7.55  chart -2.33%
D.r. Horton, Inc. Common Stock29.92  chart -0.86%
Walt Disney Company (the) Commo91.96  chart -1.40%
Edison International Common Sto75.55  chart -0.09%
Hyatt Hotels Corporation Class 48.82  chart -3.04%
Home Depot, Inc. (the) Common S125.45  chart -1.83%
Kb Home Common Stock16.07  chart +2.36%
Kroger Company (the) Common Sto30.08  chart -1.22%
Lennar Corporation Class A Comm42.95  chart -0.37%
Laboratory Corporation Of Ameri137.02  chart -0.27%
Linn Energy Llc Unit Repstg Ltd0.0491  chart -1.80%
Linn Co Llc Com Shs Repstg Ltd 0.051  chart +0.00%
Lowe's Companies, Inc. Common S70.81  chart -2.13%
Marriott International67.15  chart -1.88%
Mcdonald's Corporation Common S116.53  chart -0.55%
Mitsubishi Ufj Financial Group,5.29  chart -2.04%
Netflix, Inc.94.56  chart -1.44%
Office Depot, Inc.3.60  chart -2.96%
Rite Aid Corporation Common Sto8.04  chart -0.62%
Rexford Industrial Realty, Inc.23.17  chart +0.35%
Regal Entertainment Group Class21.33  chart -1.07%
Ross Stores, Inc.63.76  chart -0.78%
Republic Services, Inc. Common 50.78  chart +0.00%
N/aN/A  chartN/A
Starbucks Corporation54.04  chart -0.72%
Smart & Final Stores, Inc. Comm12.51  chart -1.11%
Sears Holdings Corporation10.99  chart -4.77%
Six Flags Entertainment Corpora54.00  chart +0.52%
Sonova N135.60  chart -1.81%
Staples, Inc.8.31  chart -2.69%
Sunpower Corporation8.27  chart -2.93%
Target Corporation Common Stock67.22  chart -2.25%
Time Warner Cable Inc209.56  chart +0.00%
Ulta Salon, Cosmetics & Fragran237.81  chart +0.34%
Walgreens Boots Alliance, Inc.80.68  chart -1.67%
Waste Connections, Inc. Common 74.28  chart -0.11%
Whole Foods Market, Inc.28.65  chart +0.46%
Waste Management, Inc. Common S63.50  chart +0.22%
Wal-mart Stores, Inc. Common St71.62  chart -1.01%
Woodward, Inc.61.00  chart -0.52%
CURRENCY CONVERTER

Latest Additions to SCVNews.com
A group of burglars drove a pickup truck through the glass front doors of the Valencia Ice Station and stole the business’ ATM, while the business was closed Sunday.
Burglars Run Truck Through Valencia Ice Station for ATM Machine
Canyon Country (West) Crime Report for the week of 09/11/16- 09/17/16
Crime Blotter: Gun Stolen, Man Punches Woman in CC-West
Canyon Country (East) Crime Report for the week of 09/11/16- 09/17/16
Crime Blotter: 2 Ford E-350s Stolen in CC-East
Newhall Crime Report for the week of 09/11/16- 09/17/16
Crime Blotter: Robberies, Burglaries in Newhall
Valencia Crime Report for the week of 09/11//16 - 09/17/16
Valencia Crime Blotter: Attack with Brick, Robbery with Taser, more
Saugus Crime Report- Week of 09/11/16 - 09/17/16 Santa Clarita Valley Sheriff’s Station Crime Prevention Unit
Crime Blotter: Burglary, Knife Threat in Saugus
Castaic/ Val Verde Crime Report for the Week of 09/11/16 - 09/17/16
Crime Blotter: Thefts in Castaic Area
Stevenson Ranch Crime Report- Week of 09/11/16 -09/17/16
Bank Robbery Tops Stevenson Ranch Crime Blotter
1876 - California oil industry born as CSO No. 4 in Pico Canyon becomes state's first commercially productive oil well [story]
I have taken many walks on the plains of Tanzania with Masai body guards armed with spears and occasionally rifles. It is rather unnerving to think at any moment, you could become prey to a lion, cheetah or another apex predator.
World’s Deadliest Creatures
1970 - Lagasse family helps save Mentryville buildings as Newhall and Malibu brush fires erupt & join into worst fire in SoCal history. Twelve fires over 10 days burn 525,000 acres, kill 13 people and destroy approx. 1,500 structures. [story]
The College of the Canyons men's soccer team played to a scoreless draw vs. West Hills Lemoore on Friday in a game that saw lots of back-and-forth action.
Men’s Soccer: COC Plays to Scoreless Draw with West Hills Lemoore
The College of the Canyons cross country program continues to improve each race, and with the Western State Conference championships a little less than a month away, the Cougars could be peaking just in time for another strong postseason run.
Cross Country: Cougars Keep Improving
1855 - Sanford & Cyrus Lyon establish Lyon's Station (for stagecoaches) near today's Sierra Hwy & Newhall Ave [story]
Professional endurance driver Carl Reese of the Santa Clarita Valley and Sebastián Montero of Quito, Ecuador, set a new world record for riding on motorcycles from the closest point on Earth to the sun to an elevation at sea-level in a single day.
2 Riders, 1 from SCV, Set World Record from Highest to Lowest Point
Crime Watch Daily with Chris Hansen is adding another special correspondent to its already impressive roster, announcing Tuesday that New York Times bestselling author and community activist Kim Goldman will join the Daytime Emmy-nominated show, which has just begun its second season.
SCV Nonprofit Leader Kim Goldman Joins WB’s ‘Crime Watch Daily’ as Special Correspondent
Jack and Jill of America Inc., a membership organization dedicated to nurturing future African-American leaders, has announced its 2016-2017 National Teen Board, Morgan Smith, a senior at West Ranch High School, is the Far West Region teen president from the Santa Clarita-Antelope Valley Chapter.
West Ranch Senior is Group’s Teen Leader for Western U.S.
Academy Class No. 415, which is made up of 63 male and 16 female deputy sheriffs; and 5 male and 2 female police officers from El Segundo, Inglewood, Los Angeles School and Montebello Police Departments, graduated from the Los Angeles County Sheriff’s Department Biscailuz Center Training Academy in Los Angeles during ceremonies held Friday.
86 Recruits Become Peace Officers Friday
The free test is valued at $40 and checks for 12 drugs — seven illicit and five prescription — and comes with substance abuse prevention strategies and a family drug prevention plan.
Sept. 26: Sheriff Handing Out Free Home Drug Test Kits in Val Verde
Assemblyman Scott Wilk honored California Bakery & Cafe on Friday as the 38th Assembly District Small Business of the Month.
Prieto’s Calif. Bakery & Cafe is Wilk’s Small Biz of Month
The City of Santa Clarita has been announced as one of the finalists for The Los Angeles County Economic Development Corporation’s (LAEDC) 2016 Most Business-Friendly City in Los Angeles County Award. Compton, Downey, Lakewood and Long Beach are also in the running.
Santa Clarita 1 of 5 Finalists for County’s Most Business-Friendly City (LAEDC)
The City of Santa Clarita invites nonprofit organizations interested in learning more about the 2017 Community Services and Arts Grants Program to a meeting on Tuesday, Sept. 27, at noon at City Hall.
Want City Arts or Community Services Grant? Come to Meeting
Proving education doesn’t always happen in the classroom, 23 students from Bowman High School volunteered to work next to construction workers at the Habitat for Heroes project on Centre Pointe Parkway in Santa Clarita Friday.
Bowman Students Learn Skills with Homes for Heroes
Women in California will have more reliable and effective access to birth control under a bill authored by Senator Fran Pavley and signed by Governor Jerry Brown on Friday.
Pavley Birth-Control Bill Signed Into Law
Not everyone cares if the food actually includes a certain ingredient, as long as the flavor tastes right to them. But, says Douglas Balentine, Ph.D., director of FDA’s Office of Nutrition and Food Labeling, if you don’t want a substitute source of the flavor you’re seeking — if, say, you want real maple syrup in your food — the information you need will be in the ingredient list on the food package.
What’s in a Name? What Every Consumer Should Know About Foods
1948 - Agua Dulce Women's Club organized [timeline]
The intersection at Whites Canyon Road and Soledad Canyon Road will experience nighttime and early morning lane closures from 7:00 p.m. to 5:30 a.m., on Monday, Sept. 26, and Tuesday, Sept. 27, due to construction for the Road Rehab Project.
Lane Closures Coming to Whites, Soledad Sept. 26-27
Logix Federal Credit Union donated $1,000 to Sequoia School’s biomedical curriculum, part of the cutting-edge course work from Project Lead the Way. The credit union’s contribution was about 30 percent of the cost of the program.
Logix FCU Donates $1k to Charter School for Biomed Program
Playing for the first time on Reese Field this season, The Master’s University women’s soccer team battled No. 10 Vanguard University in both teams’ Golden State Athletic Conference opener Wednesday afternoon.
Soccer: Lady Mustangs on Short End of 1-0 Conference Opener
The College of the Canyons women's golf team competed at Western State Conference tournament No. 3 on Monday, with sophomore Amanda Horii turning in a team-best score of 86 at Elkins Ranch Golf Course.
Golf: COC’s Amanda Horii Leads Team Effort on Links
The No. 11 College of the Canyons women's volleyball team picked up a 3-0 (25-17, 25-14, 25-20) victory over San Bernardino Valley College on Tuesday, to record the program's 20th consecutive regular season home win.
Volleyball: COC Sweeps San Berdo for 20th Straight Win at Home
The College of the Canyons women's soccer team finally had the opportunity to play a home match on Tuesday, with the Lady Cougars exciting the home crowd behind three goals and a shutout defensive performance to claim a 3-0 win over Los Angeles Valley College.
Soccer: Lady Cougars Win Home Opener 3-0 Over L.A. Valley
Tonight on SCV NewsBreak, the stepsister and an ex-con were charged with the murder of the woman who was found dead in Gorman. Plus, Westfield Valencia Town Center saw "Elements" on display. Watch these stories and more in tonight's edition of SCV NewsBreak.
SCV NewsBreak for Thursday, September 22, 2016
The Saugus Union School District announced all classrooms in all 15 District schools will be outfitted with interactive touchscreen flat panel computers by November.
Interactive Touchscreen Computers Come to the Saugus Union School District
One of the biggest events of the year is coming up October 29 at College of the Canyons and volunteers are needed.
Oct. 29: Rampage Comes to COC, Volunteers Needed
The intersection at Whites Canyon Road and Soledad Canyon Road will experience nighttime and early morning lane closures from 7 p.m. to 5:30 a.m., on Monday, September 26, 2016 and Tuesday, September 27, 2016 due to construction for the Road Rehab Project.
Commuters Warned of Lane Closures on Whites and Soledad Due to Road Rehab Project