State Farm calls for increase in home insurance premiums in California
State Farm is calling for an increase in home insurance premiums in California. At the same time, state data shows that homeless encampments and wildfires are affecting the insurance of California businesses.
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California’s insurance commissioner has announced plans to streamline the review process for insurance premium increases in an effort to address the state’s “insurance crisis.”
Commissioner Ricardo Lara presented the proposed reforms last week, saying they would help stabilize the insurance market and benefit consumers, insurers and government officials alike.
“Consumers will benefit from a thorough and transparent rate review with more insurance products and greater availability of coverage,” he said. “Today, I am strengthening my Department’s ability to enforce the deadlines established under Proposition 103 over 30 years ago. 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 resolving this crisis, and I am moving forward to fulfill my commitment to complete long-needed reforms this year,” Lara said.
Governor Gavin Newsom said he “fully supports the plan.”
“It is part of a larger package of solutions from the state to ensure that Californians have adequate access to insurance and to counteract the market exodus that is hurting consumers. These are the necessary actions to address the insurance crisis in California,” he said.
What is the process in California when insurance companies want to increase their rates?
If insurance companies want to increase their premiums (Prop. 103 of 1988), they must justify the increase and provide “comprehensive data” explaining the need, Lara said in a bulletin.
“However, since 1988, the Department’s rate change application review and approval process has lengthened beyond the existing Prop. 103 statutory approval timelines due to a number of factors,” he explained. “Therefore, under my existing authority granted to me by Prop. 103, I am issuing this bulletin to all insurance companies regulated by the Department to increase the transparency and speed of rate change application review and approval times in a manner that is beneficial to consumers, the Department and the insurance marketplace.”
How are requests for rate increases handled in California?
Several administrative changes have been ordered to increase the speed with which insurance rate reviews are submitted and completed. These changes primarily revolve around the ongoing development of a “data matching tool” that insurance companies can use when submitting claims to speed the flow of information between insurers and the agency. The details of the changes are outlined in the bulletin.
From the insurance companies to his department, “I hold everyone in the process accountable,” Ramos said.
“My measure gives insurers more certainty in their upcoming filings so that we can restore a competitive insurance market and close coverage gaps,” he said. “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.”
