California's major insurers have 30 days to respond, according to Commissioner Ricardo Lara.
"Every insurance company is on notice with this letter to provide us with data so we can tell them what they owe consumers," said Deputy Insurance Commissioner Michael Soller.
It's the latest salvo in a squabble over whether Lara's refusal to approve more than a dozen rate hike requests in the last 29 months jeopardizes insurance companies' ability to write policies in California. Insurance companies have already returned $2.4 billion in excess pandemic profits, but they are now losing money as traffic has returned to pre-pandemic levels, with inflation and supply chain shortages compounding the cost of increased claims due to poor driving habits.
"We are concerned about the impact CDI's inaction is having on the auto insurance market and California drivers," said Denni Ritter, American Property Casualty Insurance Association's vice president of state government relations.
She stated that insurers are "encouraged to see the department make some moves toward at least reviewing these filings" and that she will provide data that will "demonstrate the extreme cost drivers that CDI has been ignoring."
Several major corporations have announced plans to reduce their California marketing or operations, with the CEOs of Progressive and Kemper citing Lara's refusal to consider rate increases in their decisions last month.
The conflict arises as Lara seeks reelection against Republican Robert Howell, who is not expected to pose a serious challenge.
The companies argue that Lara cannot force the additional refunds he claims are still owed to consumers because of a 2021 appellate court decision that he claims is being interpreted too broadly. Lara's demand letter is his latest attempt to include insurers' previous profits in their current rate increase requests.
His letter was sent to 47 California businesses, addressing 54 rate increase applications, including 38 that had been stalled for months.
The letter claims that insurers' claims costs "became overstated as a result of policyholders driving significantly less." "The Department of Insurance seeks premium refunds in the full amount owed to policyholders on behalf of California consumers."
According to the three-page letter, the detailed cost information will be considered in the department's review of any pending or future rate increase requests. It includes a separate "refund information workbook," which is a spreadsheet with five subcategories in which companies can expand on requested details in at least six different areas.