Update — California’s Lara Demands Insurer Pandemic Claims Accounting

California Insurance Commissioner Ricardo Lara has ordered 47 auto insurers to give him detailed information on claims costs they incurred during the pandemic. Deputy Insurance Commissioner Michael Soller said the insurers have 30 days to respond.

“With this letter, every insurance company is on notice to give us data so we can tell them what they owe consumers,” Soller said.

Lara contends the insurers overcharged consumers in pandemic 2020 when traffic practically vanished from California streets and highways. Insurers — as you might suspect — don’t think they owe consumers anything.

To date the insurers in California have given back more than $2.4 billion in excess pandemic profits.

In the last 29 months, Lara has not even considered granting rate increase requests. Lara’s refusal, combined with inflation, supply chain shortages and traffic returning to normal, is increasing insurer operating costs.

Denni Ritter of the American Property Casualty Insurance Association (APCIA) says this dispute is the reason Lara has refused to give auto insurers rate hikes.

That — in itself — is creating an insurance crisis in California.

“We are concerned about the effect that CDI’s inaction is having on the auto insurance market and California drivers,” Ritter said. She said that as several insurers — like Progressive and Kemper — have scaled back marketing efforts.

Lara’s letter addressed 54 rate increase applications. Of those, 38 have been stalled for months. In the letter Lara claims the claims costs of insurers are “overstated as a result of policyholders driving significantly less. On behalf of California consumers, the Department of Insurance seeks premium refunds in the full amount of what policyholders are owed.”

Whatever information comes back to the commissioner will be used to decide whether or not the company gets a rate increase and rate increases in the future.

Companies continue to contend that Lara has no authority to ask for more refunds. A state appellate court has agreed with the insurers yet Lara continues to ask for more.

Source link: Associated Press https://bit.ly/3yiQVt5