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Monday, February 12, 2024

California’s insurance commissioner, Ricardo Lara, has issued a stern warning, signaling potential penalties for insurers employing delaying tactics against individuals seeking car insurance in the state.

The Insurance Commissioner of California, Ricardo Lara, is confronting insurance companies who may be violating state laws by limiting access to auto insurance for safe drivers. Following several complaints from consumers received by the insurance department, Lara released a bulletin warning of enforcement actions and encouraging insurers to contact the department’s legal division for further clarification.

Lara expressed her dissatisfaction with the tactics used by insurance companies to delay or obstruct drivers’ access to coverage. These practices are not acceptable and pose a risk to people. Lara’s spokesperson Michael Soller mentioned that the complaints came from different sources, including the department’s consumer hotline, legislators, local officials, insurance agents, brokers, and consumer groups. However, the exact number of complaints received was not specified.

Lara listed several practices that she considered inappropriate in the bulletin. These include lengthy questionnaires, unnecessary verification requests such as employment and school information, insistence on in-person responses to electronic communication, inquiries about excluded drivers at the same address, and requests for utility bills, vehicle registrations, and pictures of licenses or vehicles.

Walter Roberts, an insurance broker, presented evidence that highlighted the delays and unnecessary requirements drivers had to go through, which confirmed Lara’s concerns. With over 30 years of experience, Roberts expressed his relief in retiring, stating that the current market was the most challenging he had ever dealt with, which made the day-to-day operations much less enjoyable.

Lara’s bulletin reminded insurers of their obligations: the necessity to publicly file changes before implementing them, binding coverage within 15 business days of receiving an application, and the mandate to offer auto insurance to qualified good drivers, along with providing discounts.

Denni Ritter, representing the American Property Casualty Insurance Association, blamed California’s regulatory system for creating difficulties for consumers to access necessary insurance coverage. Ritter claimed that the outdated regulations in the state are causing delays and challenges for consumers and lawmakers, but did not provide any specific details on the regulatory shortcomings.

The insurance industry has reported that the cost of claims has risen due to increased rate requests. This year, approved rate increases have averaged 13.2%, which is higher than the 10.6% increase seen in 2019. Furthermore, the industry has pointed out that California laws impose certain limitations on the use of telematics to accurately price car insurance premiums. However, they believe that this technology could be potentially beneficial in assessing risk.

Consumer Watchdog’s Executive Director, Carmen Balber, urged the Insurance Department to take concrete enforcement actions beyond simply restating laws. Balber emphasized previous instances where Commissioner Lara’s interventions have led to premium refunds for drivers impacted by pandemic lockdowns. However, she also stressed that more could have been done to benefit drivers. Lara has continued to pursue refunds, and so far, $200 million has been returned since 2021, with an overall amount of $2.6 billion.

The press release from the Insurance Department mentioned that some insurance companies contacted had stopped the practices that Lara had criticized. However, they did not disclose the names of these companies except for Allstate, which agreed to modify its practices. This includes resuming online quotes and offering monthly premium payments for new drivers similar to policy renewals starting from February 7.

Lara is taking a proactive stance to ensure that good drivers in California have fair access to auto insurance. She aims to rectify any practices that have obstructed or delayed coverage. By remaining vigilant and engaging with insurers, Lara’s efforts seek to uphold consumer rights and promote fair insurance practices in the state.

This post was originally published on East Bay Times

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