REGULATORY SYSTEM ANALYZED

The California system held up by a consumer group as a model for auto insurance regulation in fact may have kept California consumers from enjoying billions of dollars in premium reductions over the past decade. That’s among the key findings of an analysis of California’s regulatory system by one of the country’s most respected insurance researchers. In his paper released at the winter meeting of the National Association of Insurance Commissioners (NAIC), David Appel, Ph.D., concluded that it was possible California consumers would have saved more than $10 billion over the last 10 years if a competitive market had been permitted to function in the state instead of the restrictive regulations of Proposition 103. Earlier this year, a report by the Consumer Federation of America concluded that the state of California, under the provisions of 1988’s Proposition 103, should serve as a model for state insurance regulation. At the request of the Alliance of American Insurers, the American Insurance Association, the National Association of Independent Insurers and the National Association of Mutual Insurance Companies, Appel conducted a review of the CFA study. In his study, Appel found that the political uncertainty imposed on the auto insurance rate approval system by Proposition 103 cost California auto insurance buyers between $8.6 billion and $13 billion.

Topics California Legislation