Commissioner Lara doesn’t want easier rate changes for home insurance companies

Home insurance companies - home, money, calculator
Mogix UV Light Sale

The California Insurance Commissioner is siding with consumer activists to halt legislation.

California Insurance Commissioner Ricardo Lara is taking the side of consumer activists in an effort to stop a bill that would make it faster and easier for home insurance companies to change their rates.

AB 2167 passed the state Assembly on Monday by a vote of 56-3.

That said, the bill’s opponents say that this would set the stage for home insurance companies to impose substantial premiums spikes for homeowners in parts of the state hardest hit by wildfires. This would include Northern California. The bill is meant to allow insurers to follow a faster path to have their rate hikes approved.

“(The bill) is an insurance industry wish list with nothing to help consumers. It does nothing to further the purposes of Prop. 103 passed in 1998 to stop discriminatory insurer practices and provide oversight for insurance rates,” said Lara in a conference call that took place before the vote.

Following the Assembly’s approval, the legislation was referred to the Senate Insurance Committee. That panel includes Senator Bill Dodd (D-Napa). On Monday, Dodd’s opinion on the bill remained unknown. That said, he has been historically critical of the industry ever since the North Bay wildfires in 2017.

The bill lets home insurance companies respond to rapidly changing risks with faster rate changes.

If the bill passes, it will speed up the process insurers must use to apply for a rate increase in homeowners’ premiums when they say those rate changes would reflect the market conditions and risks at the time. The legislation arose in the fallout of the massive and destructive Californian wildfires in recent years, which have come with a price tag for insurers of at least $20 billion.

The bill would also make it possible for home insurance companies to include their costs for purchasing reinsurance coverage in the ratemaking process. Currently, California law says that homeowners’ insurers can raise their rates up to 6.9 percent per year without facing a hearing process with the state insurance department Home insurance companies - home, money, calculatorchallenging the rate change. That process can take over a year to complete. The new legislation would require the process to take no longer than 120 days.

Related posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.