California Insurance: Intervention, Interference

In the insurance circle, Florida and California have a questionable difference in perennial issues with home and auto insurance. In both states, unique factors that the insurance market is not aware of in any other state are severely damaged. In Florida, vandals are litigating crazy. Florida is “Nearly 80%“In the overall homeowner insurance lawsuit across the country. In California, destruction is the legacy of the ballot box proposal, Proposition 103has been in place since 1988. For 36 years, the law has been so serious about insurers doing business in the state that it has encountered a lot of scent in California, either choosing not to write business in the state or limiting the business they write there.

Florida’s insurance market is finally in a state of modification due to recent infringement reform Build 11 New Florida and restore market health Insurance companies. In California, by contrast, the market continues to be plagued by the restrictions arising from Proposition 103.

Proposition 103 introduce Among the elected insurance specialists, rollbacks of individual line rates, previous rate approvals, and forward-looking models in the development of prohibited reinsurance costs and proportions are familiar to insurance professionals. One feature of Prop 103 is not understood by the role of the intervener.

What is an intervener?

If California insurers seek growth rate greater than 6.9%, a hearing can be held, i.e., “interventors” (usually consumer advocates) can question the insurer’s request for rate change. The insurance companies seeking tax rate changes are Responsible Used to pay for intermediate fees, which can be paid for millions of dollars California ins. Code §1861.10.

From 2003 to 2023, insurance companies Remunerated $23.1 million was provided to interveners. The Lions’ share of intervention costs was handed over to a company’s consumer regulator, formerly known as the Foundation for Taxpayers and Consumer Rights. Other interveners include the California Consumer Federation, Consumer Union, Southern Christian Leadership Conference, Green Line Institute, Joint Policyholders, and more. During the same period, insurance companies paid just $18.4 million in consumer regulators, while other interveners collectively collected $4.7 million. Note that in nearly half of 20 years, consumer watchdogs are the only interveners.

Insurers tagged as the highest intermediate bill include Allstate, Farmers, State Farm and Mercury. In 2017, an intervention involving state farms incurred more than $1.9 million. If this represents a lawyer’s bill California’s legal work done Lodestar Attorneys must work for 2.5 years with a single intervention for a fee of $400 per hour. In a petition for a 2023 hearing, farmers’ insurance tax rate rises, consumer regulators public Among other expenses, its senior staff attorney’s intervention budget includes $595 per hour, its staff attorney’s attorney’s $350 per hour, and $695 per hour for lawyer work at Harvey Rosenfield, 200 per hour and $915 per hour for consulting actuarial The division, totaling nearly $400,000. Note that Rosenfield is the author of Props 103.

Injury caused by the interventionist

Proposition 103 artificially suppresses the rate by relieving from risk. The rate-making process for insurers involves analyzing expected losses to calculate the cost of loss. If the policy is issued in high-risk areas with artificially lower premium premiums, this is a lack of risk, which signals homeowners that their risk has been fully covered by tax rates, but that is not the case. California decree It is believed that the insurance premium rate is insufficient. In addition to violating one’s own regulations, this also leads to the exceptional phenomenon of California’s insurance premium rates below the national average, even if California suffers from numerous dangerous homelands in many other states. These include mudslides, wildfires, earthquakes, floods and riot.

National average annual premium for homeowners insurance is $300,000, with residential coverage of $2,258, close to twice the average in California and twice the $1,250, making California in the 9 cheapest homeowners insurance markets middle.

The average cost of homeowner insurance in state-owned homeowner insurance is $300,000 in residential coverage (in $)

(source: Insurance company)

The above data suggest that proposal 103, including interfering interference, prevents insurers from selling their products at risk-adjusted prices. This is price-controlled, and for those who prefer free market policies, prices are determined by supply and demand forces rather than by the government. In a government-controlled price fixed economy, price signals that would otherwise incentivize consumers to pursue risk management and pay for risk-adjusted prices will not be sent. In today’s regulatory cut environment, this may be the right time to shed light on the legacy of Proposal 103 and consider sending it into a historic bin, benefiting insurance buyers and providers.

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