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Commissioner Ricardo Lara wants to implement new reforms to review insurance tariffs
LOS ANGELES — Insurance Commissioner Ricardo Lara today released a statement on his latest administrative action to address the state’s insurance crisis.
Why this is important: Commissioner Lara today issued a bulletin implementing rate review reforms aimed at stabilizing the state’s insurance market. This implements reforms that were included in the budget proposal that Governor Newsom introduced in May and that Commissioner Lara first proposed last year as part of his Sustainable Insurance Strategy.
Commissioner Lara published today’s bulletin as part of his existing Proposal 103 Authority to help the Department conduct a rigorous and transparent review of rate change applications within the current 60-day time limit mandated over 30 years ago under Prop. 103. The bulletin focuses on improving transparency and expediting the review and approval times of rate change applications in a way that is beneficial to consumers, the Department, and the insurance marketplace. As part of this reform, the Department will also create a “data reconciliation tool” as a review that insurance companies must complete when submitting their rate applications to the Department for review.
The Commissioner’s action helps create certainty in the insurance market and requires all parties to comply with the requirements of Prop. 103. These parties include insurance companies, which are responsible for requesting the rates necessary to pay future claims and providing complete data to support their rate requests, the Department of Insurance, which conducts a thorough rate review of each filing to protect consumers and ensure a competitive insurance market, and intervener groups that wish to participate in the review of rate filings.
What Commissioner Lara says:
“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 deadlines established over 30 years ago under Proposition 103. Reducing unnecessary delays is critical to getting our state’s insurance market back on track.
“Consumers are suffering, businesses continue to lose insurance coverage, wildfires are ravaging our state – and we don’t have the luxury of time. I am ultimately responsible for solving this crisis, and I am moving forward to fulfill my commitment to complete long-overdue reforms this year.
“I expect more from insurance companies in the form of complete rate filings. I expect interveners to follow the rules and not duplicate the work of my department’s experts. And I expect my department to provide the same transparent and thorough review within the timelines that have been set out in Prop. 103 for decades. I hold everyone involved in this process accountable.
“My measure gives insurers more certainty in their upcoming filings so that we can restore a competitive insurance market and close coverage gaps. Most importantly, my measure strengthens our review process, which is an essential part of my ongoing reforms. Let me be clear: the Ministry of Insurance is the public watchdog for rates and market solvency.
“I appreciate the ongoing partnership with Governor Newsom and the Legislature’s continued commitment to provide the support and resources my Department needs to implement this transformative, lasting change.”
What Governor Newsom says:
“We have worked closely with the Insurance Commissioner and fully support these actions to modernize rate application processes in line with the timelines set out in Prop 103. This is part of a broader set of solutions from the state to ensure Californians have adequate access to insurance and to address market flight that harms consumers. These are the actions needed to address California’s insurance crisis.”
Notes:
- Rate Review Accountability Bulletin. The Department issues bulletins to enforce insurance laws and regulations.
- The Governor and the Legislature authorized the Department in the fiscal year 2023 and 2024 budgets to provide ongoing funding for consulting services related to the review of property and casualty insurance premium submissions. Since then, the Department has contracted with several firms for actuarial and rate review services in collaboration with the Department’s rate regulation experts.
- To meet the needs of timely and thorough oversight, the Department has hired additional tariff review staff and continues extensive efforts to ensure adequate staffing for the tariff review process in the future.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation’s largest insurance market and protects all of the state’s consumers through fair regulation of the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect California residents from excessive, unreasonable, or unfairly discriminatory insurance premiums, monitor the ability of insurers to pay claims, set standards for licensing agents and brokers, conduct market conduct examinations of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are encouraged to call 1-800-927-4357 with questions or contact us at www.insurance.ca.gov via web form or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. For teletype (TTY) please dial 800-482-4833.
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