Insurance Department Must Protect Public's Right to Scrutinize Insurance Rate Increases Consumer Watchdog Says in Letter to Commissioner Lara After Abrupt Approval of GEICO Rate Hike

LOS ANGELES, Dec. 7, 2022 /PRNewswire/ — The California Division of Insurance coverage has authorised a $268 million enhance in auto insurance coverage premiums for GEICO prospects with out following the general public participation necessities of Proposition 103. General, the 6.9% fee hike will affect 2.1 million GEICO policyholders who face a median $125 annual premium enhance. In a letter this morning, Shopper Watchdog – which had formally challenged the speed enhance as unjustified – known as on Insurance coverage Commissioner Ricardo Lara to satisfy with the group to debate the significance of implementing rights of shopper participation within the fee evaluate course of. Main auto insurance coverage corporations at the moment are demanding fee will increase, regardless that many haven’t but paid refunds to motorists who had been overcharged throughout the pandemic. 

Learn the letter despatched immediately to Insurance coverage Commissioner Ricardo Lara.
Opposite to its personal long-standing procedures, the Division didn’t require GEICO to show over many of the data requested by Shopper Watchdog, which was vital for its actuary to totally consider the proposed fee enhance. As an alternative, the company abruptly authorised the rise late yesterday.
“The Division of Insurance coverage didn’t adjust to guidelines and procedures dictated by the voters that authorize public participation within the fee evaluate course of to stop insurance coverage corporations from overcharging their prospects. The company’s untimely approval prohibited Shopper Watchdog from exercising its rights to advocate on behalf of policyholders and forces GEICO prospects to pay doubtlessly extreme premiums. Commissioner Lara should step in to guard the general public’s proper to take part within the fee evaluate course of,” mentioned Daniel L. Sternberg, lead lawyer for Shopper Watchdog within the case.
Furthermore, Shopper Watchdog identified that the Commissioner’s calendar mirrored a gathering with Geico on October 27, and acknowledged, “If GEICO urged you to quick monitor the pending fee enhance at that assembly they violated guidelines prohibiting ex parte communications and undermined the buyer protections adopted by the voters in Proposition 103.”
Underneath California’s Proposition 103, insurance coverage corporations should open their books to public scrutiny and justify requests for modifications of their charges. Customers are entitled to independently analyze the requests, get hold of extra data from the insurance coverage firm, and request a full public listening to in the event that they imagine the speed request is unjustified. This long-standing course of ensures that the Commissioner is introduced with the views of shoppers, the Division, and the corporate earlier than making his remaining resolution on a fee utility.
GEICO requested a $268 million fee enhance within the auto insurance coverage premiums its prospects pay, saying it wanted the cash to cowl submit -pandemic accidents. Shopper Watchdog petitioned for a public listening to in August, noting, amongst different issues, that GEICO could not have totally refunded its prospects for overcharges throughout the pandemic and is constant an unfairly discriminatory occupation-based ranking system charging low-income staff greater than larger paid professionals like funding bankers, consultants, surgeons, and attorneys.
Examine Shopper Watchdog’s Petition for Listening to and Petition to Intervene difficult GEICO’s requested fee hike.
The Division has lengthy acknowledged that Proposition 103 provides shopper teams who problem extreme charges by way of the speed evaluate course of an equal probability to scrutinize corporations’ information backing up proposed will increase. On this case, GEICO, the Division and Shopper Watchdog agreed final week to a schedule for GEICO to supply Shopper Watchdog with the data it requested pursuant to Proposition 103. Two days after that settlement, the Division reversed course. GEICO refused to supply many of the information and knowledge requested by Shopper Watchdog and the Division authorised the rise yesterday with out requiring GEICO to provide the data. 
Voter-approved Proposition 103 prohibits the Division from approving charges which are extreme, insufficient, or unfairly discriminatory. Auto insurance coverage premiums have to be primarily based totally on three necessary components – driving security file, annual mileage, and years driving expertise, and different elective components adopted by regulation. Schooling and occupation will not be authorised ranking components. 

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SOURCE Shopper Watchdog

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