The insurance commissioner must act now to avert a coverage crisis

We have been running a family-owned independent insurance agency for over 50 years. Those of us in the insurance business know that when customers come to us for insurance, they want to buy security. In the Californian market today, securing that security is becoming increasingly difficult and could get much worse without action from our elected insurance commissioner.

Independent insurance agents serve consumers by studying their needs and then looking for policies to meet them. In a healthy competitive market, consumers are well served. There is no such market in California today. Consumers are left with fewer options, and thousands of small businesses like my family are finding it increasingly difficult to serve them.

The California Insurance Department has been in a moratorium for more than two years and has not reviewed rating plans submitted by insurers struggling with rising inflation and claims costs. In December, the Department began reviewing rating plans and has so far approved 11 plans. This is good news and helps keep California’s insurance market functioning, but more than 80 rating plans remain with the Department and are pending action. While they wait, insurance companies operate on pre-pandemic and pre-inflation rate plans, paying out more on claims than the income they make from premiums. Not surprisingly, insurance companies are leaving the California market.

As a result, California is on the verge of a coverage crisis that will severely limit or even prevent consumers from getting the security they want.

Allstate has suspended the sale of new auto policies through independent insurance agents in California and phased out monthly payment options, requiring consumers to pay at least half of their insurance premiums upfront.

Geico closed 38 local offices and stopped selling new auto policies through call centers. Progressive Insurance dropped advertising to limit new policies. Several operators have removed their companies from the software that independent agents use to receive new quotes.

Approximately the same situation in the homeowners insurance market. Allstate recently told agents to suspend offering new policies in California, and others are likely to follow suit.

This is a clear call to action for newly re-elected Insurance Commissioner Ricardo Lara. He has the ability to influence the backlog of tariff plans so that more companies offer more policies in our state. Ultimately, it is this competition between suppliers that will lead to a variety of options and better prices for consumers.

Make no mistake, this is a California-only issue. Other states have approved new rating plans that take into account today’s reality of inflation, supply chain delays, a surge in traffic accidents and the severity of car accidents. If this reality persists, insurance companies will simply stop doing business in the only state where they lose money on every product they sell.

The Insurance Commissioner has a constitutional responsibility to ensure a healthy, sound, and functioning California insurance market by reviewing and approving rate plans that adequately reflect the cost of claim coverage.

If this duty is not fulfilled, there are consequences. We are already starting to face them, and a full-blown market crash is looming. Insurance agencies, many of which are small family businesses, are feeling this now as it takes longer and a lot more work to find new coverage for customers, if they can find it at all.

Inaction will have cascading economic consequences: car sales will fall when buyers can’t find car insurance, lenders won’t give mortgages to homebuyers who can’t insure their property, business loans will dry up. Consumers will remain frustrated and unsure.

We are on the verge of a crisis. On behalf of consumers and independent insurance agents, I call on the Insurance Commissioner to approve the rate plans required for new policies.

Content Source

California Press News – Latest News:
Los Angeles Local News || Bay Area Local News || California News || Lifestyle News || National news || Travel News || Health News

Related Articles

Back to top button