California wants to raise insurance rates faster. Why the plan is being criticized
The Department of Insurance wants companies to be able to raise their prices for home and auto policies more quickly in the state.
Yet major companies aren’t a fan of how it plans to do so.
That message was shared clearly by representatives of key insurance trade groups at a hearing Tuesday.
“As currently drafted we do not believe there’s anything in these proposed regulations that is helpful in addressing the insurance market crisis,” said Seren Taylor, a lobbyist with the Personal Insurance Federation of California. “Instead, it likely exacerbates the current problems.”
Taylor was referring to proposed rule changes the agency released last month. Their goal was to make the process of reviewing rate increases more simplified and — in turn — faster. Under state law, the department reviews requests by companies to raise prices for home, auto, business and other insurance policies. In some cases, it can take more than a year to do so.
That has frustrated insurers, which point to lengthy reviews as one of several challenges of operating in California. In recent years, major companies have limited or paused selling policies in the state, leaving homeowners with fewer options and higher prices.
In response, Insurance Commissioner Ricardo Lara has vowed to make several changes this year in an effort to provide relief. The ones discussed Tuesday were the first he introduced.
Lara has said insurance companies are slowing down the examinations by submitting incomplete information. The department said the news rules made clear what it was looking for from insurers.
Taylor disagreed, saying the suggested rules added more confusion.
One of the changes would give the agency 30 days, instead of 14, to determine if a company sent in everything it needed to.
Denni Ritter, a lobbyist for the American Property Casualty Insurance Association, a national trade group, criticized the revision, and instead suggested the department impose a strict deadline for staff to complete reviews.
Ritter said speeding them up is “a paramount priority to stabilizing” the insurance market and that the group “believes the proposed regulations will only cause further delays by adding more bureaucracy, red tape, uncertainty and open-ended requirements.”
The department said it would respond to comments it received on Tuesday and in writing. It can modify the proposed changes based on the feedback.
This story was originally published March 27, 2024 at 9:00 AM with the headline "California wants to raise insurance rates faster. Why the plan is being criticized."
