ACIC Disappointed in Calif. Supreme Court Action

June 28, 2004

The Association of California Insurance Companies (ACIC) expressed disappointment Monday in the decision by the California Supreme Court not to review a key case related to insurance rate regulation in the state.

The Court decided not to accept the petition to review the Court of Appeal’s ruling in the Donabedian v. Mercury Insurance Company case. ACIC had submitted a letter urging the Court to accept the case.

“As we said in our letter to the Court, the Court of Appeal’s ruling throws the law into a state of confusion,” ACIC President Sam Sorich said. “Under the appellate court’s ruling, insurance companies are uncertain whether their rates are to be regulated by the insurance commissioner or by hundreds of superior court judges around the state.

“By approving Proposition 103, California voters decided that the regulation of ratemaking activities should be centralized in the office of the insurance commissioner. Delegating rate regulatory authority to the courts is contrary to the voter-approved proposition. Moreover, regulating rates through class action lawsuits would lead to chaos.”

Sorich noted that the issues presented in the Donabedian case are being litigated in other cases pending in appellate courts.

“We hope that the Supreme Court will accept the appeal of one of those cases so that the issues can be resolved and certainty can be restored to California’s insurance regulatory system,” Sorich added.

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