View this article online: https://www.insurancejournal.com/news/west/2021/03/23/606649.htm

California High Court Affirms Consumer Rights to Dispute Insurance Rates

A California Supreme Court decision has reaffirmed California Insurance Commissioner Ricardo Lara’s assertion that consumers have a right to dispute insurance rates that have not been properly filed and approved.

The court’s decision involved title insurance, but has implications for consumer protection in other lines, according to the California Department of Insurance.

Commissioner Lara filed an amicus brief in Villanueva v. Fidelity National Title Co., and the court’s 7-0 decision noted that his view is consistent with five different insurance commissioners across a period stretching back nearly 30 years.

The court’s decision found Lara’s position to be supported by “institutional expertise,” and worthy of “considerable respect.”

“Consumers have an essential voice when insurance companies charge unauthorized rates that they failed to file as required by California law,” Lara said in a statement. “The Supreme Court’s decision removes any ambiguity that insurance companies are not immune from consumer action under California law meant to protect them from unfair competition and other harmful practices.”

The court agreed with Lara’s position that several immunity statutes in the California Insurance Code do not give insurance companies blanket immunity from civil suits for all ratemaking activity. The court found that the statutory immunity for “act[s] done . . . pursuant to the authority conferred” (Cal. Ins. Code, § 12414.26) by the rate-filing statutes does not shield title insurers from suit for charging unauthorized rates, and the Insurance Commissioner does not have exclusive jurisdiction over such claims.

The court found that title insurers are not immune from consumer actions under the state’s Unfair Competition Law when they charge unfiled rates in violation of the statutory mandates.

California law required Fidelity to file its rates with the commissioner before charging consumers, but it failed to do so. The court concluded that was a violation of the express terms of the Insurance Code, and Fidelity has no statutory immunity from suit under section 12414.26.