View this article online: https://www.insurancejournal.com/news/west/2009/01/28/97333.htm
California Insurance Commissioner Steve Poizner announced a number of fee reductions resulting in $10.3 million in annual savings, including a 6 percent fee reduction for more than 300,000 licensed insurance agents, brokers and adjusters.
“It’s important for government to operate as efficiently as possible — and this is especially true in tough economic times. After completing a top down review and implementing a permanent 10 percent cut in the Department’s budget, we are able to reduce the fees CDI charges,” he explained.
The 6 percent reduction will apply to hundreds of fees charged by CDI. The most common fee is paid by agents, brokers and adjusters for their licenses. Going forward, the cost of renewing a license will decrease from $144 to $135. The total savings for license renewals will be $3.5 million annually.
By law, the Insurance Commissioner is empowered to increase or decrease most insurance fees by 10 percent without legislative approval. This is the first time in the Prop. 103-era that an elected Commissioner has reduced fees, the Department of Insurance indicated.
In addition to the 6 percent fee reduction, Commissioner Poizner also lowered two other fees:
-A 30 cent surcharge on auto insurance policies is scheduled to sunset in 2010 and is used to support consumer activities related to automobile insurance. This includes 5 cents for the California Low Cost Auto Insurance program and 25 cents to fund consumer service activities and related complaint investigation work. A portion of the surcharge was originally intended to fund a backlog of auto insurance complaint investigations that has now been reduced, CDI said. Commissioner Poizner is proposing to extend the sunset on this program by five years and reducing the 30 cent rate to 20 cents to reflect the backlog reduction. This reduction will have no impact on the California Low Cost Auto Insurance program and is estimated to save Californians $3 million.
-When Commissioner Poizner took office in January 2007, CDI faced massive vacancies in the fraud division that threatened CDI’s ability to crack down on insurance fraud, he said. The legislature granted CDI the authority to raise a special fraud assessment paid by insurers to $5,100 to enhance recruitment and retention efforts and fill vacant positions. While the vacancies have been filled, employee recruitment and retention funding pay proposals have been delayed due to the state’s current budget problems. Thus, Commissioner Poizner is reducing the special fraud assessment from $5,100 to $2,100 reflecting those delays. The expected cut will result in approximately $3.8 million in savings for ratepayers.
“Despite budget cuts and fee reductions, the Department remains committed to protecting consumers,” Poizner said. “In the last two years, CDI has arrested more people for fraud-related crimes than any two-year period under any previous insurance commissioner. This year, I am proposing to increase the amount of money granted to local district attorneys to fight insurance fraud from $51 million to $66 million.”
Earlier this month, Commissioner Poizner announced that he would voluntarily reduce the CDI’s operating budget by 10 percent by applying sound business practices to government. The Commissioner concluded that reductions could be made in overhead expenditures and vacant positions to permanently reduce CDI’s operating budget by 10 percent and consequently, fees could also be reduced by 6 percent.
This reduction equates to savings of approximately $13 million per year. The reduction will not impact funding for statutorily mandated costs such as grants distributed to local law enforcement governments that are used to fight insurance fraud.
Source: CDI