If passed, the measure could throw the state's current Sustainable Insurance Strategy into question. (Credit: Oleksii/Adobe Stock)
A proposed ballot initiative in California seeks to change the way property and casualty insurance is regulated in the state.
Since 1988, Proposition 103 has provided the regulatory framework for property and casualty insurance in the state. Insurance companies must get approval for rate increases from an elected insurance commissioner, and members of the public are able to object to increases.
The proposed measure seeks to repeal most of that. If approved, the insurance commissioner would be appointed by the governor instead of elected. Prior-approval rate review would be replaced by a deadline-driven process, in which rate filings would need to be completed within 120 days. It would allow insurers to set rates that account for reinsurance costs and wildfire mitigation activities.
A public comment process would be allowed under the proposal, but the act would end the intervenor process established by Proposition 103. That process allows third-party consumer representatives to challenge rate filings, and their costs and fees are paid by insurers.
The proposal would also mandate that the Department of Insurance maintain wildfire risk maps, updated every three years, to be used in rate filings and underwriting decisions.
The measure was submitted by Elizabeth Hammack, an independent insurance agent, this week. She wrote that she “has seen first-hand the dysfunction” caused by Proposition 103. She wrote that the goal of the measure is to “restore insurer participation in the California market, expand insurance coverage availability to consumers and provide fair and adequate rates to consumers.”
To make it onto the 2026 ballot, the initiative has to collect more than 546,000 signatures from registered voters in the state by April.
The proposal, if passed, could throw the state's current insurance reform efforts into question. Earlier this year, California Insurance Commissioner Ricardo Lara rolled out a new Sustainable Insurance Strategy that also aims to boost insurer participation in the state by allowing the use of forward-looking catastrophe models for the first time. In exchange for setting rates using the models, insurers must also commit to offering coverage in some of the state’s fire-prone areas.
Douglas Heller, director of insurance for Consumer Federation of America, told CalMatters that the rate-making process proposed by the new measure is the one used in states that have seen some of the most dramatic rate spikes in the country.
“Removing oversight of the insurance companies at this moment would be like shutting down the fire department in the middle of a blaze,” he said.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.