Department of Insurance Must Set Rules to Protect Consumers
With a spate of insurers demanding rate increases, a consumer group called on California Insurance Commissioner Harry Low to issue a moratorium on all rate hikes–at least until appropriate standards are in place to allow the public to properly scrutinize insurers’ requests. In a letter sent to Commissioner Low, the Foundation for Taxpayer and Consumer Rights (FTCR) writes that the lack of sufficient regulations has allowed insurers to overcharge consumers in recent years.
“The public wants standards to ensure that insurance companies are not ripping off consumers,” said Pam Pressley, a lawyer with FTCR. “Commissioner Low must impose a moratorium on pending rate hikes until he completes the task of adopting appropriate regulatory standards to determine if the proposed rates increases are appropriate or excessive.”
Proposition 103, the 1988 insurance reform initiative, created a public process to allow for consumer participation in the approval of rates, but still no public standards have been set to properly determine whether rates filed are excessive in violation of the law.
Terrorist attacks and economic slow-down should not lead to rate increases for homeowners and drivers
FTCR is also concerned that insurers may cite national economic conditions and the aftermath of the September 11 attacks to defend their proposed increases. Pointing to the fact that some of the companies currently seeking substantial increases have already had smaller hikes approved earlier this year, the consumer advocates argued that companies are looking to take advantage of politician’s trepidation in challenging various industries’ requests for economic assistance.
“Insurers should not be allowed to bootstrap rate increases for personal auto and homeowners’ insurance to the current economic climate and losses incurred as a result of the terrorist attacks and lower profitability in the current economy,” said Pressley. “A dip in their profits does not justify double-digit rate increases.”
For a factsheet on the background of Prop 103‘s prior approval regulations, go to http://www.consumerwatchdog.org/insurance/fs/fs002097.php3: