Consumer Group Criticizes California’s Rate Approval Regulations

A consumer advocacy group is condeming California Insurance Commissioner Steve Poizner’s action in issuing emergency regulations governing the state’s prior approval insurance rate system.

According to The Greenlining Institute, the new regulations make it more likely that insurance companies will redline California’s underserved communities.

The Commissioner announced his new regulations on Monday in hopes of making the rate filing process more efficient, accurate and transparent. Greenlining insists that the regulations will do none of the above and would irreparably harm underserved communities.

According to the group, under the current rules, “financial investment in underserved communities” is a factor for rate setting. The Commissioner’s proposed rules eliminates this factor altogether, according to Samuel Kang, the group’s legal counsel, who said that eliminating that factor would give the insurance industry permission to redline underserved communities.

“This would have a devastating impact on California’s most vulnerable residents,” he said. “The record budget shortfall is already forcing underserved communities to slash basic vital services. Choking off investment when it is most needed would be a nightmare scenario.”

Greenlining was also critical of how the new regulations would measure the level of service of insurance companies in underserved communities. The group contends that under the proposed rules, an insurance company that is in the top 25 percent of service to underserved communities would receive favorable treatment in rate setting.

Kang said that the problem is that no insurance company has a record of service that is better than mediocre. “For the most part, the record of service by even the top 25 percent in the industry is awful,” he said.

Ultimately, the group believes that the proposed regulations would make it easier for insurance companies to raise their rates. Thus, it is asking the commissioner to withdraw the regulations until their impact can be examined through a public hearing.

“I’m already dismayed by the lack of service in underserved communities by the insurance industry,” Kang said. “The new regulations don’t just lower the bar. They throw the bar out the window.”

The regulations are being reviewed for approval by the Office of Administrative Law.

Source: The Greenlining Institute

Topics California Legislation Pricing Trends