Roughly 1.7 million homeowners and renters with State Farm Insurance could receive millions of dollars in reimbursements.
The company is accused of illegally increasing its insurance rates and overcharging its customers millions of dollars over the last year and a half.
California’s Insurance Commissioner, Dave Jones, ordered the company to reimburse its customers and roll back a recent increase of nearly seven percent. That increase in question went into effect on July 2015.
“The amount of money [customers] should expect within a year’s time is about $70 million in rate reduction, plus refunds in excess of $100 million dollars for past excessive rates,” says Michael Levy, who represents the Legal Division of California’s Dept. of Insurance.
The Commissioner says the insurance company increased its rates, without approval from the state.
In California, insurance companies are required to justify any hike in its rates. It’s part of proposition 103, which was approved by voters nearly 30 years ago.
State Farm is pushing back by challenging the mandate.
It filed a lawsuit in San Diego's Superior Court, claiming the order is unjust and unlawful.
In company statement, State Farm’s spokesperson Sevag Sarkissian writes:
“State Farm is disappointed with the Commissioner’s decision…We do not believe the Commissioner’s decision is lawful, and are therefore taking the necessary legal steps to challenge the rate reduction, rate refund and public release of our confidential trade secret documents.”
Watchdog groups argue State Farm is only trying to avoid accountability.
“State Farm is trying to hide the ball, hide the money and pretend it's broke,” says Harvey Rosenthal, a consumer advocate who helped write Proposition 103.
“State Farm is saying the rules are unconstitutional. The rules infringe [its]constitutional rights to a fair profit- which is an outrage.”
The next hearing is scheduled in San Diego on December 16.