California Commissioner Lara Takes 1st Shot at Regulation Reforms

California Insurance Commissioner Ricardo Lara has released the first salvo of his Sustainable Insurance Strategy program. This is the first of several packages Lara says he’ll introduce to streamline his department’s rate approval process.

To stem the bleeding from the state’s homeowners and auto insurance crisis, and hopefully get the many insurers who’ve quit writing homeowners insurance in California, Lara wants to modernize the state’s rate increase system for home, auto and business.

At the same time he wants to make sure insurance companies stay within the clear guidelines established by the Department of Insurance.

“Our goal is to safeguard the integrity of the insurance market comprised of consumers, homeowners, and businesses. My proposed regulations represent a crucial step towards fostering a fair, transparent, and efficient rate approval process,” Lara said in his news release. “By updating submission procedures and clarifying requirements for insurance companies, we aim to eliminate confusion, reduce delays, and enhance public participation in the rate-making process. This will help our Department’s experts make sure that no policyholder is paying more than is required.”

Lara said the amendments he’s proposing will address “critical issues” that now exist — via Proposition 103 — when an insurance company submits a rate increase application. The commissioner said the regulations we have now definitely need updating.

“The existing regulations, created in an age of pagers and pay phones, lack clarity and fail to specify the exact materials and information required in a complete rate filing application given the change in times and increased complexity of filings,” Lara’s news release said. “This ambiguity can lead to confusion among insurance companies and delays in the review process, ultimately impacting consumers’ access to fair and appropriate insurance rates and insurers’ level of certainty on their filings and the review process.”

These are what Lara says are the highlights of his proposals.

Clarity in Submission Requirements: Insurance companies will now have clearer instructions about what must be submitted with a complete rate application, with necessary materials and information clearly specified by regulations. This clarity will provide insurance companies with certainty regarding the documentation required for initial rate submissions.

Front-Loading the Delivery of Key Information: The proposed regulation will eliminate lengthy exchanges between the Department and insurers about incomplete applications before the rate review process may actually begin. These amendments will also provide consumer representatives more opportunity to timely review insurer rate applications in order to decide whether to intervene in the rate review process.

Inclusion of Criteria and Guidelines: The proposed amendments mandate what insurers must provide so the Insurance Commissioner may assess whether requested rates are appropriate and not excessive, inadequate, or unfairly discriminatory. This includes any and all criteria, guidelines, systems, manuals, models, and algorithms used to assess risks or modify coverage options, as set forth in California Insurance Code section 1861.05.

The commissioner says these new regulations are crucial for effectively evaluating rate applications. They will let department experts assess the requested changes accurately and as quickly as possible without compromising the effectiveness of the evaluations.

The plan will also give consumer representatives and other regulatory authorities a chance to quickly review those submissions.

“We want to promote efficiency, accountability, and fairness in the property and casualty insurance market,” Lara added. “We look forward to continued public input to help modernize our policies and practices so we can continue to safeguard the integrity of the insurance market.”

Written comments can be submitted until March 26, 2024.

Source link: California Department of Insurance — https://bit.ly/3uov05b

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