California’s Lara & Insurer Transparency

California Insurance Commissioner Ricardo Lara has enacted the Comprehensiveness Review Regulation part of his Sustainable Insurance Strategy. For insurers the process is completely voluntary, and if they “volunteer,” their rate request will be “fully transparent.”

In other words, consumers will now be able to see how the insurance experts at the California Department of Insurance challenge rate request hikes. Lara says it’s going to save California consumers a lot of money. This happens before the rate hike is approved, or denied, under the rules of Proposition 103.

“Every dollar Californians pay for insurance should be justified. For the first time, consumers will be able to see how Department experts analyze insurance companies’ rate requests, challenge unsupported assumptions, and prevent policyholders from paying more than the law allows,” Lara said. “This regulation strengthens one of the most important safeguards protecting California families, homeowners, drivers, and businesses.”

Lara’s news release on Monday, October 19th said this will revolutionize how rates are approved or denied in California.

“Under this enhanced regulatory process, the Department will be able to publicly release predicted rate savings achieved by its expert rate regulation staff — something unprecedented in its history,” the news release said. “Since 2019, the Department’s annual robust review of hundreds of insurance company rate filings for property, commercial, and auto lines has saved consumers $6.6 billion. The new regulation ensures the public can see this work in action.”

This is Lara’s attempt to speed up the rate review process. The department’s news release said the slower rate review times have often left consumers having trouble finding available, and affordable, insurance.

“This regulation directly addresses those problems: anticipating insurance companies will provide information upfront in the process, allowing the Department’s review to move forward immediately with questions fully answered,” Lara’s news release said.
“The regulation complements the Department’s Complete Rate Application Regulation which has been in effect since 2024, reducing delays due to incomplete information submitted by insurance companies before being publicly noticed.”

Lara’s concept will give the public unprecedented access to the department’s thinking on a rate increase application before the insurer formally asks for the increase.

“Californians will be able to see exactly what the Department’s analysis shows — including the dollar amounts saved and the issues flagged in each submittal. This level of transparency gives consumers direct visibility into the process that determines what they pay for coverage,” the news release added. “The comprehensiveness review would be voluntary for insurance companies, who could choose to skip this optional step and move directly to a formal rate filing — in which case the Department’s current review process would still apply as it has for decades under Prop. 103.”

Lara says the insurer transparency is long-overdue.

“Government works best when people can see it working,” Lara said. “This regulation shines a light on the rate review process and gives Californians a clearer understanding of how decisions are made, how insurance companies are held accountable, and how the Department protects the public interest. Greater openness builds confidence in the system and supports a stronger, more sustainable insurance market for everyone.”

At the time this story was written on Tuesday, October 19th, insurance companies and associations had not responded.

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