California insurance commissioner issues proposed changes for insurers

SACRAMENTO, Calif. (CN) — Californians can now comment on the first set of proposed regulatory changes issued Friday by the state’s insurance commissioner. A public hearing on those changes is set for March 26.

The changes come as residents find it harder to obtain homeowner’s insurance — a topic Insurance Commissioner Ricardo Lara spoke about at a state Senate Insurance Committee meeting in January.

Lara at that meeting laid out a series of regulatory tweaks he intends to make. The first of which, revealed Friday, would bring rate applications made by insurance companies up to date, helping modernize the process.

The proposed changes would affect home, auto, business and other property and casualty insurance rate applications.

“My proposed regulations represent a crucial step towards fostering a fair, transparent, and efficient rate approval process,” Lara said in a statement. “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.”

People can submit their comments to [email protected].

According to Lara, the current regulations aren’t clear and don’t state the precise information needed to make a complete application. That’s because the existing regulations were made when paperwork was ascendent. As paperwork gave way to electronic communication, confusion has grown with insurance companies. That’s led to delays in reviewing applications, which has affected people’s access to fair insurance rates.

Under the proposal, insurance companies will have clearer instructions about what information they must include in a complete application. This will give companies the assurance they’re providing the necessary materials.

A mandate about information insurers must provide will enable Lara’s department to determine if the rates they’re requesting are proper and not excessive or unfairly discriminatory.

The proposal also will cut the lengthy back-and-forth between Lara’s department and insurance companies about incomplete applications. That discussion delays the rate review process, which can’t start until the department has a complete application.

Lara said the regulatory changes are essential to properly evaluate rate applications. That, in turn, helps his department correctly and quickly assess the change without negatively affecting quality.

All application materials are public under the proposal, heightening transparency.

“We want to promote efficiency, accountability, and fairness in the property and casualty insurance market,” Lara said. “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.”

Friday’s proposal is the first of several changes Lara is planning. He mentioned others at January’s Senate Insurance Committee meeting.

Focusing at that hearing on homeowner’s insurance, Lara said his two main goals are to increase insurance availability and lower the pressure on the state’s Fair Access to Insurance Requirements plan, or FAIR plan.

The FAIR plan is an insurance of last resort, though its use has been rising.

In addition to Friday’s proposed changes, Lara also wants to hire more actuaries and analysts to meet workload demands. Changing criteria for how rates are determined — for example, including home hardening and the removal of fire fuel near a home — also is a goal.

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