SACRAMENTO, Calif. (CN) — The people who would be most affected by the proposed changes to California’s insurance rules mostly supported Insurance Commissioner Ricardo Lara’s sustainable insurance strategy.
But while they heralded that strategy for addressing the insurance crisis the state is experiencing, many opposed the actual changes during a Tuesday public hearing.
Lara early this year revealed the proposed regulation changes he wants to implement. They include increasing insurance availability and reducing the pressure on California’s Fair Access to Insurance Requirements Plan, or FAIR plan.
Tuesday’s hearing focused on one aspect of his proposal — ensuring insurance companies submit all required materials in a rate-making application.
Lara says existing submission regulations fail to clearly state what is needed for a complete application. They were written when paperwork, not electronic communication, was paramount. Confusion regarding the process has grown over the years, leading to delays in reviewing applications and, consequently, people getting fair insurance rates.
Seren Taylor, with the Personal Insurance Federation of California, agreed that regulations written over 35 years ago lack clarity.
“This results in confusion among insurance companies,” he said.
However, the proposed changes only add confusion and uncertainty to the process, Taylor said. Some portions of the current regulations are deleted, with vague requirements taking their place. He sees no clear definition of what comprises a complete application.
Taylor said he wants to see a practical checklist of what materials must be included when applying for a rate.
“Despite these concerns, we hope we can work with the department,” Taylor added.
Denni Ritter, with the American Property Casualty Insurance Association, also expressed appreciation for Lara’s sustainable insurance strategy. She noted that the existing rate-making process is outdated and has hindered opportunities to properly set rates.
But, like Taylor, she expressed skepticism as to whether the proposed changes would help, believing, instead, they will create further delays
The suggested tweaks increase the number and complexity of the documents required for a complete application, Ritter said. That, in turn, will require more staff to analyze the materials.
Ritter also called the proposal “overreaching,” as it calls for proprietary information.
“This will add time and resources for companies to compile,” she said.
Stephen Young, with Independent Insurance Agents & Brokers of California, said his members were in crisis. He, like a handful of others, is grateful Lara is taking action, though he added that the proposal doesn’t accomplish its goals.
Individuals unaffiliated with the insurance agency also spoke at the hearing Tuesday. Homeowner Nick Belaevski, who purchased his house in 2021, said his insurance rates doubled last year. His agent told him that California was in a crisis. Now, he worries that his rates will more than double in the future, and he wants more transparency in rate increases.
“I’m very, very concerned about it,” Belaevski said.
Karl Susman had a different take from most of the speakers. An insurance broker, Susman agreed that the state faces an insurance crisis. He discussed carriers not renewing policies or leaving California entirely.
However, he pointed to Lara being elected by voters twice to his position.
“Step aside and let him do the job he was elected to do,” Susman said.
According to Susman, the proposed changes will reduce the time it takes to process a rate application, getting Lara’s office the information it needs to make a proper decision.
The next step in the process is a public workshop set for April 23. It will focus on catastrophe modeling regulations.
The regulatory process is expected to be completed in December.
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