California Progressives want companies to pass along the benefits of the Tax Law?????? What about other businesses? What about consumers? Everyone to pay California for their tax excesses? These people are anti business, anti consumer and perhaps should secede at the earliest date possible.
Agent inexplicably asked, “What about other businesses?”
This may come as news to you, Agent, but in California the Insurance Commissioner only regulates the insurance industry.
As far as California seceding, you Texans might not want to be suggesting that while you’re still holding out your hat, asking for $61 BILLION in Federal Assistance.
Psst; it’s largely due to how the Fed operates. Also consider the drain due to Illegal Alien invaders on the TX economy. Finally, how much do TX citizens PAY IN INCOME TAXES to the Fed? Please post THAT figure, ASAP, to show us how your cut & paste comment from a liberal website (Huff & Puff?) is an incomplete picture of reality.
How much do Texicans pay in income taxes to the Federal Government? Easy answer: LESS THAN Californians. THAT’S why you shouldn’t want CA to secede while you still have your hand out, my myopic friend. Unless of course you can’t see the big picture here.
January 25, 2018 at 2:32 pm
Tax Cuts 4 PolaRich Bears says:
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5
Please post those numbers and we’ll compare them to population stats, and I’ll review BLS wage levels for a micro-analysis of the tax implications. Thanks.
January 26, 2018 at 9:15 am
UW says:
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Texas receiving federal money is largely due to how the Fed operates. Stupid and meaningless. Of course, yes taxing liberal states to give money to conservative states is largely how the federal government works, I guess Texas is joining the party.
January 26, 2018 at 2:21 pm
Captain Planet says:
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UW,
Who are you kidding, joining the party? Texas hosts the party!
January 23, 2018 at 1:32 pm
Shaking my head. says:
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3
Yet another example of CA lawmakers trying to drive business out of CA.
Insurers doing business in CA have to input their premium and loss data into Excel templates created by the CDI. The CDI then tells the insurers what price they are allowed to charge in order to achieve the target loss ratio set by the CDI (not the insurer’s target loss ratio). Insurers have to enter the salaries and bonuses of their 5 highest paid executives, and by formula the CDI determines their max salary/bonus. Currently, a company that writes 1billion is allowed to pay their highest executive 500,000/yr. If they pay more, the “excessive” pay is subtracted from the rate-making data. Insurers have to enter their investments into a template, and the CDI determines how much investment income to deduct from the rate-making data. If the template works the way the commissioner has designed it, insurers break even. No profit to pay tax on. 35% of zero going to 21% of zero. If the CDI has the authority to tell insurers how much profit they are allowed to make, I think it may be outside the CDI’s jurisdiction to tell the insurers what to do with any profit they are somehow able to make in CA. Anyone who thinks insurance is not already socialized in CA hasn’t done a rate filing there.
Hector,
Are you suggesting any insurer who does business in CA must follow these templates made by CDI? We write business in CA all day long. We aren’t told which rates we must use. That sounds more like Wisconsin WC to me. We can’t impact pricing on that line in WI. We have little desire to keep losing money on WC in WI. So, until that changes, I don’t see producers and underwriting aggressive after that line. The agricultural class code rates are a joke up there. And, the ag workforce is an aging one. Not a good combo.
CP – Hector is talking about the templates you must use when filing rates for prior approval with the CDI. Not the same as any templates you may be using to calculate rates that are already filed and approved.
This is much ado about nothing. Any tax savings insurers see will already be passed onto consumers through the established rate-setting process. An insurer’s tax burden is factored in to the profit provision of the calculation. Jones is seeking headlines for no reason.
Having done CA rate filings in the past, what @Hector sez is correct. There are allowable expenses and expense ratio as well as overall return targets CDI has created over the course of time for stock carriers, mutuals and reciprocals/exchanges. PL gets a lot more attention then CL due to the political orientation the Commissioners job has taken since its been elective. Jones still thinks he can get elected to a higher office if he produces enough press releases showing how much he hates insurance companies and wants to punish them. Yawn. Am so glad I don’t live there or handle CA anymore.
Carriers who are there with the exception of Mercury are able to get what they want and more in spite of the regulations but its daunting for a new entrant to go in and navigate through all of the corruption that is endemic to heavy and punitive regulation. So sad. CA used to be a good place to do business.
Prop. 103 says that “a fair and reasonable rate of return” for a CA P&C carrier is 10%. This has been hashed out over 30 years ago, people. Comm. Jones is just upholding Prop. 103.
10% Profit! Outrageous. How can Californians allow such gouging? Competition between insurance companies for customers clearly won’t work to keep prices and profits low. We must insert the Government to dictate to businesses! Imagine if some clever insurance company found some way to lower premiums for more and more customers, and as a result, ended up with profits of 12%. Oh, the horrors.
(Meanwhile, Apple has hit profits as high as 40% without a wimper from Dave Jones or his buddies.)
The % varies by LOB and type of carrier @SacFlood.
It also changes from time to time based on the work done by the CDI staffers who do that analysis the formula is based on. Additionally that rate of return doesn’t take into consideration carrier expense levels that are not in compliance with CDI guidelines, expenses that are deducted or removed-like the area for excessive salaries for executives or advertising CDI considers inappropriate. CDI has also questioned expenses related to trade groups, Chamber of Commerce and the like and surprisingly some charitable contributions.
All that said, carriers who are domiciled in CA or have been in CA historically have been successful in leveraging campaign contributions from carrier PACs to the right politicians to help get what they want. CDI Commissioners tend to shun those contributions but there are other pols who are able to sway the Commissioner. Worked for a CA domiciled carrier and saw this happen with that carriers PAC. Its dirty and gives those carriers who have money for campaigns a big leg up on those who chose to play it straight.
One time I actually got feedback from a filings analyst as well as his boss on how to make multiple filings that would avoid scrutiny from Consumer Watchdog-the renamed group that succeeded the Prop 103 Project Harvey started.
Have to admit that I took that advice and got 2 separate rate increases approved in consecutive months that by themselves didn’t attract any attention but had we filed it singularly, would have totaled well over 30% on a business that was generating about $50MM in commercial GWP. And we had very little in the way of actuarial documentation from our UK partner in this coverage…but somehow it got approved. Feel like taking a shower just thinking back to that time.
How about Calif does a financial review of a current shell entity holding minimum capital and the financial exam of the Q3 took 13 hours. The exam of a multi million dollar affiliate writing in all states took 15 hours. I called them on the carpet on this egregiousness and all the reviewer could tell me was that it included a review of the Holding Company filings. Do they review those each time they review a different insurer within a holding company system? How else can a shell with $8M in capital take 13 hours to review. Watch your invoices, I think they are cheating their insurers or the reviewer is padding their time
35% of zero going to 21% of zero. Big windfall.
California Progressives want companies to pass along the benefits of the Tax Law?????? What about other businesses? What about consumers? Everyone to pay California for their tax excesses? These people are anti business, anti consumer and perhaps should secede at the earliest date possible.
Agent inexplicably asked, “What about other businesses?”
This may come as news to you, Agent, but in California the Insurance Commissioner only regulates the insurance industry.
As far as California seceding, you Texans might not want to be suggesting that while you’re still holding out your hat, asking for $61 BILLION in Federal Assistance.
Psst; it’s largely due to how the Fed operates. Also consider the drain due to Illegal Alien invaders on the TX economy. Finally, how much do TX citizens PAY IN INCOME TAXES to the Fed? Please post THAT figure, ASAP, to show us how your cut & paste comment from a liberal website (Huff & Puff?) is an incomplete picture of reality.
How much do Texicans pay in income taxes to the Federal Government? Easy answer: LESS THAN Californians. THAT’S why you shouldn’t want CA to secede while you still have your hand out, my myopic friend. Unless of course you can’t see the big picture here.
Please post those numbers and we’ll compare them to population stats, and I’ll review BLS wage levels for a micro-analysis of the tax implications. Thanks.
Texas receiving federal money is largely due to how the Fed operates. Stupid and meaningless. Of course, yes taxing liberal states to give money to conservative states is largely how the federal government works, I guess Texas is joining the party.
UW,
Who are you kidding, joining the party? Texas hosts the party!
Yet another example of CA lawmakers trying to drive business out of CA.
That’s like getting a raise and the state of CA telling you that you have to give some of it to the poor. So happy we don’t write business in CA.
Insurers doing business in CA have to input their premium and loss data into Excel templates created by the CDI. The CDI then tells the insurers what price they are allowed to charge in order to achieve the target loss ratio set by the CDI (not the insurer’s target loss ratio). Insurers have to enter the salaries and bonuses of their 5 highest paid executives, and by formula the CDI determines their max salary/bonus. Currently, a company that writes 1billion is allowed to pay their highest executive 500,000/yr. If they pay more, the “excessive” pay is subtracted from the rate-making data. Insurers have to enter their investments into a template, and the CDI determines how much investment income to deduct from the rate-making data. If the template works the way the commissioner has designed it, insurers break even. No profit to pay tax on. 35% of zero going to 21% of zero. If the CDI has the authority to tell insurers how much profit they are allowed to make, I think it may be outside the CDI’s jurisdiction to tell the insurers what to do with any profit they are somehow able to make in CA. Anyone who thinks insurance is not already socialized in CA hasn’t done a rate filing there.
Hector,
Are you suggesting any insurer who does business in CA must follow these templates made by CDI? We write business in CA all day long. We aren’t told which rates we must use. That sounds more like Wisconsin WC to me. We can’t impact pricing on that line in WI. We have little desire to keep losing money on WC in WI. So, until that changes, I don’t see producers and underwriting aggressive after that line. The agricultural class code rates are a joke up there. And, the ag workforce is an aging one. Not a good combo.
CP – Hector is talking about the templates you must use when filing rates for prior approval with the CDI. Not the same as any templates you may be using to calculate rates that are already filed and approved.
Insurers just lost there behinds this year in fire losses. I doubt there will be anything to pass on.
This is much ado about nothing. Any tax savings insurers see will already be passed onto consumers through the established rate-setting process. An insurer’s tax burden is factored in to the profit provision of the calculation. Jones is seeking headlines for no reason.
Read Hector Projector’s comment above and reply to it.
I used fewer words than Hector, but we are both saying the same thing.
Having done CA rate filings in the past, what @Hector sez is correct. There are allowable expenses and expense ratio as well as overall return targets CDI has created over the course of time for stock carriers, mutuals and reciprocals/exchanges. PL gets a lot more attention then CL due to the political orientation the Commissioners job has taken since its been elective. Jones still thinks he can get elected to a higher office if he produces enough press releases showing how much he hates insurance companies and wants to punish them. Yawn. Am so glad I don’t live there or handle CA anymore.
Carriers who are there with the exception of Mercury are able to get what they want and more in spite of the regulations but its daunting for a new entrant to go in and navigate through all of the corruption that is endemic to heavy and punitive regulation. So sad. CA used to be a good place to do business.
Prop. 103 says that “a fair and reasonable rate of return” for a CA P&C carrier is 10%. This has been hashed out over 30 years ago, people. Comm. Jones is just upholding Prop. 103.
10% Profit! Outrageous. How can Californians allow such gouging? Competition between insurance companies for customers clearly won’t work to keep prices and profits low. We must insert the Government to dictate to businesses! Imagine if some clever insurance company found some way to lower premiums for more and more customers, and as a result, ended up with profits of 12%. Oh, the horrors.
(Meanwhile, Apple has hit profits as high as 40% without a wimper from Dave Jones or his buddies.)
The % varies by LOB and type of carrier @SacFlood.
It also changes from time to time based on the work done by the CDI staffers who do that analysis the formula is based on. Additionally that rate of return doesn’t take into consideration carrier expense levels that are not in compliance with CDI guidelines, expenses that are deducted or removed-like the area for excessive salaries for executives or advertising CDI considers inappropriate. CDI has also questioned expenses related to trade groups, Chamber of Commerce and the like and surprisingly some charitable contributions.
All that said, carriers who are domiciled in CA or have been in CA historically have been successful in leveraging campaign contributions from carrier PACs to the right politicians to help get what they want. CDI Commissioners tend to shun those contributions but there are other pols who are able to sway the Commissioner. Worked for a CA domiciled carrier and saw this happen with that carriers PAC. Its dirty and gives those carriers who have money for campaigns a big leg up on those who chose to play it straight.
One time I actually got feedback from a filings analyst as well as his boss on how to make multiple filings that would avoid scrutiny from Consumer Watchdog-the renamed group that succeeded the Prop 103 Project Harvey started.
Have to admit that I took that advice and got 2 separate rate increases approved in consecutive months that by themselves didn’t attract any attention but had we filed it singularly, would have totaled well over 30% on a business that was generating about $50MM in commercial GWP. And we had very little in the way of actuarial documentation from our UK partner in this coverage…but somehow it got approved. Feel like taking a shower just thinking back to that time.
How about Calif does a financial review of a current shell entity holding minimum capital and the financial exam of the Q3 took 13 hours. The exam of a multi million dollar affiliate writing in all states took 15 hours. I called them on the carpet on this egregiousness and all the reviewer could tell me was that it included a review of the Holding Company filings. Do they review those each time they review a different insurer within a holding company system? How else can a shell with $8M in capital take 13 hours to review. Watch your invoices, I think they are cheating their insurers or the reviewer is padding their time