A Sacramento Superior Court judge has rejected the insurance industry’s request for an injunction against auto insurance rate regulation reforms in California, but the legal challenges will not end immediately.
Shortly after the ruling on August 10, Insurance Commissioner John Garamendi issued a statement praising the decision. “This is a great victory for California voters and good drivers wherever they live,” said the Commissioner. “It means that Californians will finally realize the benefits of Proposition 103, which they approved more than 17 years ago … Now the industry must follow the rules and the law, and they must do so immediately.”
In the past several weeks, the state’s insurance associations have been fighting the decision to implement the new regulations because they believe the new regulations will unfairly raise rates for the majority of drivers. They said giving more weight to a driver’s safety record, number of years driven and annual miles driven than to other rating factors would create rates that are not based on actuarial data, and therefore would be against the law. To that end, the American Insurance Association (AIA) and the Personal Insurance Federation of California (PIFC) had filed a joint lawsuit asking the court to declare the regulations illegal and to grant a preliminary injunction. The California Farm Bureau Federation also filed a similar lawsuit.
However, the Commissioner said that insurers have not been following the intent of voter-enacted Proposition 103 due to a ruling by former Commissioner Chuck Quackenbush. The new Garamendi regulations are simply designed to fulfill what voters wanted, the Commissioner said.
Although the court denied the associations’ request for an injunction, Jerry Davies, director of communications for PIFC, said the court extended the implementation of the regulations for two days, giving them time to take more legal action. The associations plan to file an appeal in the third appellate court in Sacramento. The insurance associations are represented by Steven Weinstein of Barger & Wolen.
“The judge did not base his decision on the merits of the rule. He only ruled on the injunction request,” Davies maintained.
Topics Lawsuits California Carriers Auto Legislation
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