TerriLynn Bejcek, left, and Lassen County District 5 Supervisor Jason Ingram pose beside a billboard on Highway 395 near Janesville. Ingram said he will not be satisfied until homeowners actually get lower rates. Ingram was not available to comment on this story? Will this proposal satisfy him?

Commissioner Lara unveils first wave of proposed regulatory reforms to help safeguard the integrity of the state’s insurance market

Advancing his Sustainable Insurance Strategy announced last September, Insurance Commissioner Ricardo Lara today announced the first of several regulatory rule change packages aimed at streamlining the Department’s rate approval process. The California Office of Administrative Law published that rulemaking today and the Department invites public comment in advance of a public hearing on March 26.

California Insurance Commissioner Ricardo Lara.

These proposed changes are intended to modernize the submission requirements for auto, home, business and other property and casualty insurance rate applications, ensuring that insurance companies adhere to clear guidelines and provide comprehensive information from the outset for the Department’s review.

“Our goal is to safeguard the integrity of the insurance market comprised of consumers, homeowners, and businesses,” Lara said. “My proposed regulations represent a crucial step towards fostering a fair, transparent, and efficient rate approval process. By updating submission procedures and clarifying requirements for insurance companies, we aim to eliminate confusion, reduce delays and enhance public participation in the rate-making process. This will help our department’s experts make sure that no policyholder is paying more than is required.”

The proposed amendments aim to address critical issues surrounding insurance companies’ rate application submissions under Proposition 103. The existing regulations, created in an age of pagers and payphones, lack clarity and fail to specify the exact materials and information required in a complete rate filing application given the change in times and increased complexity of filings. This ambiguity can lead to confusion among insurance companies and delays in the review process, ultimately impacting consumers’ access to fair and appropriate insurance rates and insurers’ level of certainty on their filings and the review process.

Key highlights of the proposed regulations include:
Clarity in Submission Requirements: Insurance companies will now have clearer instructions about what must be submitted with a complete rate application, with necessary materials and information clearly specified by regulations. This clarity will provide insurance companies with certainty regarding the documentation required for initial rate submissions.

Front-Loading the Delivery of Key Information: The proposed regulation will eliminate lengthy exchanges between the department and insurers about incomplete applications before the rate review process may actually begin. These amendments will also provide consumer representatives more opportunity to timely review insurer rate applications in order to decide whether to intervene in the rate review process.

Inclusion of Criteria and Guidelines: The proposed amendments mandate what insurers must provide so the Insurance Commissioner may assess whether requested rates are appropriate and not excessive, inadequate, or unfairly discriminatory. This includes any and all criteria, guidelines, systems, manuals, models, and algorithms used to assess risks or modify coverage options, as set forth in California Insurance Code section 1861.05.

Lara emphasized that these regulations are crucial for the effective evaluation of rate applications, enabling the department’s experts to assess proposed rate changes accurately and promptly without compromising on quality. Moreover, these proposed amendments promote transparency by making all rate application materials public, allowing consumer representatives and regulatory authorities to review submissions in a timely manner, as set forth in California Insurance Code section 1861.07.

“We want to promote efficiency, accountability, and fairness in the property and casualty insurance market,” concluded Lara. “We look forward to continued public input to help modernize our policies and practices so we can continue to safeguard the integrity of the insurance market.”

Lara is now receiving public comment on the regulations. Anybody may submit written comments to the Department until March 26, 2024, at which time the commissioner will hold a public hearing.