Allstate announced it will start offering home insurance policies in California again, but only if one condition is met that would make it easier for the company to raise its rates.
Allstate stopped issuing new homeowner’s insurance policies in California two years ago, citing the growing risk of wildfires and the rising costs of building materials. Since then, several more insurers have pulled out of California, leaving tens of thousands of homeowners scrambling for new policies.
But last week, Allstate’s senior vice president of government relations, Gerald Zimmerman, said in a public hearing that the company would begin selling new policies again as soon as the state’s insurance department adopts a change that would let them set rates based on catastrophic modeling.
“Let me repeat that: As soon as we can use catastrophe modeling and incorporate the net cost of reinsurance into our rates, we will be open to business in nearly every part of California,” Zimmerman said.
Catastrophic modeling is a risk management tool that assesses potential losses caused by major disasters.
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Harvey Rosenfield from Consumer Watchdog told ABC7 that letting insurers set rates based on “black box” computer models would send insurance prices “through the roof.”
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