California Insurance Commissioner Ricardo Lara on Friday released a statement on his latest administrative action designed to address the state’s homeowners insurance crisis.
Lara today issued a bulletin implementing rate review reforms he says will help stabilize the state’s insurance marketplace, which includes reforms included in budget trailer language that Gov. Gavin Newsom introduced in May.
Newsom first made the proposal to speed up the rate filing process while discussing the state’s budget during a press conference in May.
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The new proposal requires the California Department of Insurance to respond to rate requests from insurers in 120 days. If an insurer requests a rate hike on an average of more than 7%, the CDI must provide insurers with a suggested rate in 120 days.
Home insurance rates are on the rise, and availability has also become a concern, as many insurers are pulling back from the wildfire prone state. Proposed solutions to the crisis have included finding ways to expedite rate filings, enabling insurers to use reinsurance rates in filings, as well as enabling them to use catastrophe modeling to set rates.
Related: California’s Park Fire Continues to Slowly Grow to 647 Square Miles
Many of these proposals indicate a growing interest in making a change to Proposition 103, the 1988 voter-approved law that requires prior approval from the California Department of Insurance before implementing property/casualty insurance rates.
Lara’s bulletin under his existing Prop 103 authority to help the CDI conduct a rigorous and transparent review of rate change applications within the current 60-day timeline prescribed under Prop. 103. The CDI 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 CDI plants to 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. “Today, 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 added: “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.”
Top photo: Park Fire in California. Source: CalFire.
Topics California
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