California’s Consumer Watchdog Attacks New Rate Hike Rules

California’s Consumer Watchdog continues to be very unhappy about Commissioner Ricardo Lara’s proposed insurance rate hike rules. Lara wants to allow insurance companies to set rates based on climate model algorithms. According to the group, the rules don’t allow for accountability and transparency.

Nor do they — Consumer Watchdog insists — address the coverage issues of policyholders that insurers have either canceled or non-renewed.

Consumer Watchdog Executive Director Carmen Balber said Lara’s draft of the regulations does not close the loopholes that permit insurers to only insure 5% of homes in fire prone areas instead of the 85% originally agreed upon. She also noted that insurance companies will be allowed to adjust their coverage standards if they can’t meet Lara’s proposed requirements.

Worse, she said the amendments Lara has introduced ignore public input on the lack of transparency in the regulations. They — in Consumer Watchdog’s opinion — create barriers for public participation in the rate setting process.

Balber criticized Lara for missing a chance to enforce the commitments made by insurance companies, to penalize their non-compliance and to mandate transparency for the methods they’re using to justify their rate hikes.

“Today's amendments just continue the lie,” she said. “This regulation still doesn't get people insured or make the secret algorithms insurance companies will be allowed to use to raise rates publicly accountable.”

She said the new regulations also allow insurers to avoid going back into fire prone areas where they now refuse to insure homes and businesses.

Balber also noted that Lara’s new proposals will let insurers offer coverages similar to the FAIR Plan’s minimal coverage in fire prone areas instead of more full coverage. In addition, she criticized Lara for not requiring insurers to inform the department, and the public, about their progress toward meeting the plan’s coverage requirements until 2027.

And there are no penalties for failing to to meet their commitments.

Source link: Insurance Business America — https://bit.ly/3zSlcDe