California homeowners are paying 84 percent more for insurance than they did in 2020, according to Stanford University researchers. A new state regulation will let real estate agents and their clients see how regulators judge an insurer’s rate request before the company files it.
The California Department of Insurance posted the Comprehensiveness Review Regulation on Monday. Under it, insurers can submit proposed rates to the department ahead of a formal filing, and the department will post its own rate range, the problems it found in the submission and the savings it projects for consumers, according to a department release. Participation is voluntary.
“Government works best when people can see it working,” Insurance Commissioner Ricardo Lara said in a statement.
How the review works
California requires home, auto and business insurers to get state approval before charging new rates. Under the new regulation, an insurer can send its proposed rate to the department before filing a formal application. Department reviewers analyze the request, set their own rate range and post it for the public. The insurer can accept that figure or send more data to support its own, and then files a formal application.
Insurers can skip the pre-review and go straight to a formal application, the process California has used since voters passed Proposition 103 in 1988. In that process, the public sees the rate an insurer requests and the rate the department approves, and the department’s analysis in between has not been public, according to the department.
The department said the goal is faster reviews, with insurers supplying complete information at the start. It credits its rate reviews with saving consumers $6.6 billion since 2019. The release does not say when the first reviews will post or whether any insurer has agreed to take part.
What it means for California agents and their clients
Once reviews start posting, real estate agents will be able to show buyers an insurer’s requested rate next to the department’s number while they compare coverage on a home.
Those two numbers can sit far apart. Department reviewers cut a Farmers Insurance homeowners request from 6.9 percent to about 1.5 percent earlier this year, the department said in August. The California FAIR Plan, which covers homeowners who can’t get a policy from a private insurer, asked for 35.8 percent before the department approved 29.1 percent, KQED reported.
That gives buyers one more reference point when pricing insurance into a purchase. Agents can pass the reviews along to past clients nearing renewal, who will be able to check whether their insurer has a request under review and where the department landed on it.
The public reviews will cover insurers that opt in, so a request that isn’t posted could be moving through the standard filing process.
How other states share rate information
Florida, Texas and Louisiana give consumers access to rate information after an insurer files.
In Florida, the state Office of Insurance Regulation posts the rate change an insurer requests, the change it approves, and the actuary’s assumptions and recommendations behind the decision.
The Texas Department of Insurance launched public tools in June where consumers can search home and auto rate filings and compare average premiums by county. Louisiana homeowners and auto insurers will file annual reports breaking down the cost factors behind their rates starting Jan. 1, 2027, according to a state bulletin.
What comes next
Lara is term-limited and leaves office in January. Democrats Ben Allen and Jane Kim face each other Nov. 3 for insurance commissioner, and the winner will oversee the new process.
