Commissioner Lara moves to implement new insurance rate review reforms
News: 2024 Press Release
SACRAMENTO, Calif. — Insurance Commissioner Ricardo Lara and Governor Gavin Newsom today released statements on the latest administrative action addressing the state’s insurance crisis.
Why this matters: Commissioner Lara today issued a Bulletin implementing rate review reforms aimed at stabilizing the state’s insurance marketplace. 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.
Commissioner Lara issued today’s Bulletin under his existing Proposition 103 authority to help the Department conduct a rigorous and transparent review of rate change applications within the current 60-day timeline prescribed under Prop. 103 more than 30 years ago. At the core of the Bulletin, the Department 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.
The Commissioner’s action helps create certainty in the insurance marketplace and holds all parties accountable for meeting the requirements of Prop. 103. Those parties include insurance companies who are responsible for requesting the rates they need to pay future claims and providing complete data in support of their rate requests, the Department of Insurance which conducts a thorough rate review of each filing to protect consumers and ensure a competitive insurance marketplace, and intervenor groups who want to participate in the review of rate filings.
What Commissioner Lara is saying:
“Consumers benefit from a thorough and transparent rate review with more insurance products and greater availability of coverage. 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.
“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.
“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.
“My action gives insurance companies greater certainty on their pending filings so we can restore a competitive insurance marketplace and close protection gaps. Above all, my action strengthens our review process, which is integral to my ongoing reforms. Let me be clear: The Department of Insurance is the public’s check on rates and market solvency.
“I appreciate Governor Newsom’s on-going partnership and the Legislature’s continued commitment to providing the support and resources my Department needs to implement this transformational, lasting change.”
What Governor Newsom is saying:
“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. 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.”
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Media notes:
- Bulletin on rate review accountability. The Department issues bulletins to enforce insurance law and regulations.
- The Governor and Legislature have authorized the Department in the 2023 and 2024 fiscal year budgets for ongoing funding of consulting services related to the review of property and casualty insurance premium rate filings. Since then, the Department has entered into contracts with several firms for actuarial and rate review services in partnership with the Department’s rate regulation experts.
- The Department has hired additional rate review staff to meet the requirements for prompt and thorough oversight, and continues extensive outreach efforts to ensure sufficient staffing in the future over its rate review process.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
