ACIC Fights Unfair Homeowners Regs on Two Fronts

January 26, 2005

The Association of California Insurance Companies (ACIC) is fighting on two fronts against a proposed Dept. of Insurance regulation that would unfairly force many Californians to pay more than they should for homeowners insurance.

“The regulation, now before the courts and the department, would restrict an insurer’s ability to consider a policyholder’s past claims loss experience when the insurer makes its underwriting decisions,” said ACIC President Sam Sorich.

“Not only are the department’s efforts financially detrimental for many California homeowners, insurers believe the agency lacks the legal authority to impose this restriction,” added Sorich.

The Dept. of Insurance proposed the restriction in the form of emergency regulations in mid-2003. ACIC and other insurance groups successfully challenged the emergency regulations in court. The department appealed the lower court decision to the 3rd District Court of Appeal, which is expected to rule by mid-March.

Meanwhile, the department conducted a Jan. 20 public hearing in a bid to make the regulation permanent.

At the hearing, Jeff Fuller, ACIC’s executive vice president and general counsel, urged the department not to implement the regulation, arguing the agency lacks the statutory authority.

“This regulation would have a negative impact on the residential property market by imposing an unwarranted restriction on the ability of insurers to manage their exposures,” said Fuller.

ACIC also noted that legislation similar to the proposed regulation has failed to pass in each of the last two years.

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