California Bill to Speed Up Insurance Rate Increase Requests

Though California Insurance Commissioner Ricardo Lara would like his department to handle the much-needed changes, a proposal to speed up insurance rate filings first suggested by California Governor Gavin Newsom has found its way into the Newsom’s proposed budget.

He made the first suggestion that the Legislature needs to act in his budget address in May.

The bill — if passed — will require the California Department of Insurance to respond to a rate increase request within 120 days of the request. If the average is more than 7% the department has to suggest an alternative rate to the insurer within 120 days.

Since insurers — like State Farm, Farmers, etc. — started leaving California’s homeowners proposals have been tossed around in various quarters seeing what can be done to change 1988’s Proposition 103 that requires the approval of the California Department of Insurance before a rate increase can be done.

It is Proposition 103 that many blame for the problems the state is having with insurance pricing and with many insurers leaving the homeowners market.

American Property Casualty Insurance Association (APCIA vice president for state government relations for the APCIA, Denni Ritter said her organization has long pushed for changes in Prop 103 and said the APCIA likes the governor’s proposal.

“Streamlining the rate review process will help increase consumer access to coverage by ensuring rates adequately reflect risk and consumer claims — especially in the wake of rapidly changing conditions,” Ritter said. “Year-long delays in the rate approval process have created a significant market imbalance — forcing more than half of the state’s top 15 insurers to restrict new policies or exit out of the market entirely.”

As always, Consumer Watchdog’s Carmen Balber disagrees with the plan.

“The governor’s plan invites insurance companies to set their own prices and will kill public participation in rate review,” Balber said. “It takes away the Insurance Commissioner’s ability to make insurance companies justify their charges and turns the Department of Insurance into a rubber-stamp for rate increases. It guts the public intervenor process and will cost insurance consumers billions in savings from future public rate challenges. It’s up to the legislature to fix it.”

Source link: Insurance Journal — https://bit.ly/3VhqgYy

About PIA Western Alliance

The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


PIA WESTERN ALLIANCE VALUES OUR STERLING PARTNERS

More Industry News