Insurance Commissioner Lara unveils first wave of proposed regulatory reforms to help safeguard the integrity of the state’s insurance market

Advancing his Sustainable Insurance Strategy announced last September, Insurance Commissioner Ricardo Lara today announced the first of several regulatory rule change packages aimed at streamlining the Department’s rate approval process. The California Office of Administrative Law published that rulemaking today and the Department invites public comment in advance of a public hearing on March 26.

These proposed changes are intended to modernize the submission requirements for auto, home, business, and other property and casualty insurance rate applications, ensuring that insurance companies adhere to clear guidelines and provide comprehensive information from the outset for the Department’s review.

Link to Full Press Release

Key highlights of the proposed regulations include:

• Clarity in Submission Requirements: Insurance companies will now have clearer instructions about what must be submitted with a complete rate application, with necessary materials and information clearly specified by regulations. This clarity will provide insurance companies with certainty regarding the documentation required for initial rate submissions.
• Front-Loading the Delivery of Key Information: The proposed regulation will eliminate lengthy exchanges between the Department and insurers about incomplete applications before the rate review process may actually begin. These amendments will also provide consumer representatives more opportunity to timely review insurer rate applications in order to decide whether to intervene in the rate review process.
• Inclusion of Criteria and Guidelines: The proposed amendments mandate what insurers must provide so the Insurance Commissioner may assess whether requested rates are appropriate and not excessive, inadequate, or unfairly discriminatory. This includes any and all criteria, guidelines, systems, manuals, models, and algorithms used to assess risks or modify coverage options, as set forth in California Insurance Code section 1861.05.