Insurance Agents to CA Commissioner Lara: Lift Auto Rate Moratorium

Every day, insurance agents work directly with California consumers, many of whom are struggling financially. They are uniquely placed to discuss the current state of the industry as well as the impact of Insurance Commissioner Lara's decisions on California consumers. Consumers are now complaining to agents, and they are forcing them to act.

Source: American Agents Alliance | Published on October 14, 2022

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Commissioner Lara’s Rate Moratorium and his refusal to process automobile insurance rate filings is reducing options for California consumers and making their lives more difficult. “To be clear, no one wants higher insurance premiums, however, insurers can only continue serving consumers if auto insurance rates reflect the real costs borne by insurers,” said Michael D’Arelli, executive director of the American Agents Alliance.

Commissioner Lara is missing the underlying reason why auto insurers are slowing down new business submissions by changing installment plans, advertising, and agency appointments, among other things. Companies are making difficult market decisions affecting consumers and agents precisely because Commissioner Lara is no longer reviewing auto insurance filings, despite the well-documented inflation of auto claims costs.

"You can't blame insurers for pumping the brakes on new business given the current rate inadequacy caused by Commissioner Lara’s inaction on rate filings. Consumers are feeling the pain caused by the commissioner and they are contacting their agents and they are mad. In turn, agents are now asking us for strongly-worded messaging they can send to their clients about the upcoming election, and to choose wisely, ideally someone who will do their job as a regulator rather than destabilize an entire market, D’Arelli went onto say.

Insurers are working hard to find solutions to the increased pressures caused by increased traffic fatalities, the cost of used cars, which drives total loss settlements, and the costs and delays caused by repair part supply chain shortages. Commissioner Lara's moratorium deprives auto insurers of pricing for these costs and forces insurers to make decisions that no one wants. Consumers and insurance agents in California require a healthy auto insurance market. To that end, Commissioner Lara should process rate filings as soon as possible and give the automobile insurance market time to recover.