Delays in rate approval add complexity to companies’ escalating costs.
There are allegations that vehicle insurers in California are limiting the number of coverage they will issue.
Companies across the United States have increased auto insurance prices to counteract the effects of inflation and higher claims. In California, these difficulties are compounded by the slow rate-changing practises of insurance companies.
Since the California Department of Insurance froze rates during the pandemic, it has taken longer for rate hikes to be reviewed.
Insurance companies have “terminated agency appointments and restricted the submission of business,” as reported by the American Agents Alliance, a trade group for independent insurance agents and brokers, due to the delays.
“While a thorough rate approval process is necessary, urgency should now be a priority to accelerate recovery from this destabilised market,” the group wrote in an open letter to California insurance commissioner Ricardo Lara, as reported by local television network KTVU.
Industry insiders like Jerry Becerra have informed KTVU that just a small number of conventional insurance companies are actively writing new policies in California, even though no auto insurers have publicly stated that they are leaving the state’s market.
According to Becerra, president of the Oakland-based Barbary Insurance Brokerage, insurers are becoming more picky about renewing policies, which might force customers into the more expensive and perhaps less secure non-standard markets.
The insurance commissioner, he told KTVU, “needs to work diligently to alleviate the needs.”
After major insurers like State Farm and Allstate stopped providing new homeowners insurance in California, the state’s insurance problems made national attention.
The American Property Casualty Insurance Association has demanded changes to the state’s regulatory structure in response to these departures.
The group offered several remedies, including the streamlining of the rate filing process to meet statutory deadlines.
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