California’s Lara Steps Up and Implements Rate Reforms

California Insurance Commissioner Ricardo Lara has implemented some much-needed rate review reforms to address huge problems and help stabilize the state’s marketplace.

In a news release, the California Department of Insurance said, “This accomplishes reforms that were included in budget trailer language that Governor Newsom introduced in May, and which were first proposed by Commissioner Lara last year as part of his Sustainable Insurance Strategy.”

Basically, the issued bulletin “seeks to increase the transparency and speed of rate change application review and approval times in ways that are beneficial to consumers, the Department, and the insurance market. Also, as part of this reform, the Department will create a ‘data reconciliation tool’ as a check that insurance companies must complete upon submitting their rate applications to the Department for review.”

“Consumers benefit from a thorough and transparent rate review with more insurance products and greater availability of coverage,” Lara said in a statement. “I am strengthening my Department’s ability to enforce timelines set more than 30 years ago under Proposition 103. Reducing unnecessary delays is critical to getting our state’s insurance marketplace back on track.”

He also explored the why of the changes he’s implementing.

“Consumers are hurting, businesses continue to lose coverage, wildfires are ravaging our state — and we do not have the luxury of time. I am ultimately responsible for fixing this crisis, and I am moving forward to meet my commitment to complete long-needed reforms this year,” Lara said. “I expect more from insurance companies in the form of complete rate filings. I expect intervenors to abide by the rules and not duplicate the work of my Department’s experts. And I am putting the same expectations on my Department to do a transparent and thorough review within the timelines laid out for decades in Prop. 103. I am holding everyone in the process accountable.”

Governor Gavin Newsom likes the changes.

“We’ve been working closely with the Insurance Commissioner and fully support these actions to modernize the rate application processes, consistent with the timelines outlined in Prop 103,” Newsom said. “It’s part of the state’s larger package of solutions to ensure Californians have adequate access to insurance and combat market exodus that hurts consumers. These are the actions necessary to address California’s insurance crisis.”

Putting things in a nutshell, he’s what Lara implemented:

• The Department of Insurance must respond to a rate increase request within 120 days
• If the rate request is more than 7%, the department must supply the insurer with an alternative within 120 days

Until these changes, it took an average of seven months for a company to get a decision on a rate change request.

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

Source link: Insurance Journal — https://bit.ly/46OZ20v

Source link: Insurance Business America — https://bit.ly/4ctQMnQ