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Insurer-Allstate agrees to 28.5% rate reduction for California residents

I hate to pick on Allstate again, but they have really had some big problems lately.

The much maligned insurer, Allstate, recently agreed to a 28.5% rate reduction for all of its California residents. Apparently, in order to avoid the potential of having to pay a huge amount in refunds to its customers, Allstate agreed to the rate reduction.

According to the LA times article, a number of Allstate’s customers were still angry despite the rate reduction because they have been paying too much for too long. Apparently, the rate cut is worth about $250,000,000 million dollars for the consumers.

If we do the math, it looks like Allstate is going to keep all of the excessive premiums it received-at least $250,000,000, maybe more?

Now, I think maybe we have an answer to the previous questions posed-how can Allstate afford to repeatedly pay millions of dollars in bad faith claims.