Insurance commissioner called out over rate moratorium

An insurance agency association is calling for California Insurance Commissioner Ricardo Lara to reconsider his moratorium on auto insurance rate filings, as the group claims that the measure has severely limited options for consumers in the state.

“Commissioner Lara’s Rate Moratorium and his refusal to process automobile insurance rate filings is reducing options for California consumers and making their lives more difficult,” said American Agents Alliance executive director Michael D’Arelli in an open letter. “To be clear, no one wants higher insurance premiums, however insurers can only continue serving consumers if auto insurance rates reflect the real costs borne by insurers.”

According to the American Agents Alliance, Lara is overlooking the underlying reason that auto insurers are slowing down new business submissions by announcing changes to installment plans, advertising, and agency appointments, among many other things. This is because the commissioner is no longer reviewing auto insurance filings, the association said, despite the documented inflation of claims costs, thus forcing insurers to make difficult decisions that impact both agents and consumers.

“You can’t blame insurers for pumping the brakes on new business given the current rate inadequacy caused by Commissioner Lara’s inaction on rate filings,” said D’Arelli. “Consumers are feeling the pain caused by the commissioner and they are contacting their agents and they are mad. In turn, agents are now asking us for strongly-worded messaging they can send to their clients about the upcoming election, and to choose wisely, ideally someone who will do their job as a regulator rather than destabilize an entire market.”

The American Agents Alliance stated that insurers are hard at work finding solutions to the pressure caused by increased traffic fatalities, the price of used cars driving total loss settlements, as well as the costs and delays of repair part supply chain shortages. But Lara’s moratorium prevents insurers from pricing for these costs, the association contended.

“California consumers and insurance agents need a healthy auto insurance market,” the association said. “Toward that end, Commissioner Lara should resume processing rate filings as soon as possible and allow the automobile insurance market to recover.”