Insurance companies accused of delaying policies and denying discounts, says state insurance commissioner

Responding to consumer complaints about auto insurance coverage, California Insurance Commissioner Ricardo Lara issued a bulletin on Thursday reminding insurers that they cannot change policy terms and rates without formal state review and approval. The bulletin also emphasized the requirement for insurers to offer coverage to all California motorists who meet the state’s legal definition of “Good Drivers.”

The issuance of the bulletin comes in response to numerous complaints received by the department about insurers imposing unlawful requirements that are not allowed by state law, including Proposition 103, a ballot measure that regulated property and casualty insurance sold in California in 1988. The department stated that the bulletin makes the legal requirements clear to insurers and sets the stage for future enforcement actions if necessary.

Under Proposition 103, the insurance commissioner has the power to review property and casualty insurance premiums before they go into effect, known as a “prior approval” system. The law also limits the factors insurers can consider when setting rates, with the goal of preventing discriminatory premiums that do not reflect a driver’s potential for claims.

The complaints received include claims that some auto insurers may not be offering “Good Driver” discounts to those who qualify, as required by California law. Additionally, consumers have reported having to complete unnecessarily lengthy and confusing questionnaires, verify employment or school information, and provide various other forms of documentation to complete an application for insurance.

The issuance of the bulletin by Commissioner Lara aims to ensure that insurance companies are complying with the law and providing drivers with the coverage they are paying for at the rate they qualify for. The bulletin also outlines the limits on what insurers can demand from applicants and highlights the potential enforcement actions and penalties that may be imposed for non-compliance.

In addition to protecting consumers, the bulletin aims to address frustrations among insurers, some of whom have limited the new policies their agents can sell in California. There have also been reports of sharp increases in premiums for California drivers.

Overall, the bulletin serves as a reminder to insurers that they must adhere to California law and provide fair and accessible coverage to all qualified drivers in the state. It also underscores the commitment of the California Department of Insurance to monitor the situation and take necessary steps to protect consumers.

Historically, the regulation of auto insurance in California has been a topic of ongoing debate and legal action, with Proposition 103 representing a significant milestone in the effort to ensure fair, non-discriminatory insurance practices. The bulletin issued by Commissioner Lara serves as a continuation of these efforts, reinforcing the state’s commitment to safeguarding the rights and interests of California drivers.

In conclusion, the issuance of this bulletin by Commissioner Ricardo Lara reflects the state’s dedication to upholding the principles of fair and accessible auto insurance for all California drivers. It also signals a proactive approach to enforcement and oversight, demonstrating the state’s commitment to protecting consumers and ensuring compliance with relevant laws and regulations.

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