The Property Casualty Insurers Association of America is taking issue with a statement from California Insurance Commissioner Dave Jones calling for rate reviews following the federal tax legislation passed by Congress.
Jones said Monday he wants insurers in his state to pass along savings from taxes expected to be generated by the new tax bill.
“The recent revision to the Federal Tax Schedule for 2018 reduced the corporate tax rate from 35 percent to 21 percent,” Jones said. “That means that nationally insurers will now be able to retain even more of policyholder premiums as profit.”
Jones noted that in California the prior approval process that applies to property/casualty insurance rates limits insurer profits, and that he has directed his staff to commence a regulatory review of these insurers’ rates “given the major tax windfall under the new federal tax rules.”
“The home, auto, and business insurance marketplace is extremely competitive, and this is the best guarantee of service, product innovation and prices,” Sektnan said in a statement. “The impact of tax reform will vary greatly from company to company.”
Premium reductions could be one of the many options, while companies may also choose to use any excess money from taxes to expand operations and create new jobs, or provide more employee benefits and incentives.
“In California, companies’ immediate concern moving into 2018 is helping families and businesses rebuild after the tragic wildfire season,” Sektnan said. “This announcement is another example of regulators overstepping their boundaries.”
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