Legislation that would amend Proposition 103 to expand the insurance commissioner’s authority to disapprove rates beyond current standards is unjustified and unnecessary, according to the Association of California Insurance Companies (ACIC).
Under Proposition 103, rates cannot be “excessive, inadequate or unfairly discriminatory.” SB 1321 by Sen. Deborah Ortiz (D-Sacramento) would also allow the commissioner to disapprove rates that are “excessive relative to the insurance company’s profit margin.”
“There is absolutely no justification for granting the insurance commissioner this unrestricted, undefined power – particularly since it is unnecessary to the commissioner’s ability to achieve any of his regulatory objectives on behalf of California residents,” said Jeffrey Fuller, ACIC’s executive vice president and general counsel.
Fuller noted that insurance companies, like all businesses, must remain profitable in a competitive marketplace in order to remain financially viable. A competitive marketplace assures consumers that excessive profits will not occur.
“Insurers must always be competitive in their pricing while remaining financially viable in order to meet their financial obligations – principally the payment of claims. A competitive marketplace enforces the first of these two financial objectives, and the second is enforced by an independently elected state insurance commissioner with an Insurance Code full of authority to assure consumers that insurers will meet their obligations,” said Fuller.
SB 1321 is scheduled to be heard Thursday (April 29) before the Senate Insurance Committee.
Topics Profit Loss
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