PIFC: California Commissioner’s Proposed Homeowner Regs Flawed

There is not one statute in the entire Insurance Code of California that authorizes the insurance commissioner to adopt a proposed set of homeowners’ insurance regulations submitted to the Office of Administrative Law on April 26, according to The Personal Insurance Federation of California.

Dan Dunmoyer, president of PIFC, said the proposed regulations are designed more for headlines than to help the consumer. “We have reviewed the proposed regulations on alleged homeowners’ insurance non-renewals by the insurance industry and found them to be far reaching and well beyond the actual laws that the insurance commissioner is charged with upholding. We are perplexed as to why the California Department of Insurance continues to offer illegal regulations. CDI has not offered any proof of widespread arbitrary non-renewals. Similar CDI regulations proposed two years ago were ruled illegal by the Appellate Court earlier this year,” Dunmoyer said.

Gene Livingston, partner in Livingston and Mattesich law firm in Sacramento, California, was the lead attorney who filed and won a lawsuit against CDI earlier this year on what Livingston calls, almost the same regulations as those proposed April 26.

“These regulations look a lot like the regulations that the Court threw out earlier this year,” he said. “They are just reheated and covered in gravy to conceal that they are leftovers. If the insurance commissioner really believes that these regulations are valid, he has been given some very bad legal advice.”

“Saying something over and over again does not make it true,” said Rex Frazier, vice president and general counsel of PIFC. “We reject the commissioner’s repeated and unfounded assertion that insurers arbitrarily non-renew their customers.”

In an earlier poll of homeowners’ insurance companies that write 90 percent of the business, PIFC found that companies, on average, non-renew less than 1/2 of 1 percent of their policyholders each year. “But even with this miniscule number, non-renewing is not arbitrary,” Dunmoyer said.

“There are many reasons for non-renewing including: situations where policyholders change the condition of their homes thereby becoming uninsurable; policyholders are paid to make repairs and don’t; policyholders have dogs that continuously bite people and refuse to get rid of the dog; or there is a pattern of suspicious claims. Each and every company develops its own non-renewal guidelines, but proposing illegal one-size-fits-all regulations, if adopted, will only hinder a free, competitive homeowners’ insurance market and hurt our customers,” Dunmoyer added.

“These regulations are an attempt to bypass the Legislature and ignore the courts,” Frazier said. “All of our time would be better spent working out solutions. Instead, we continue to see regulation by press release with no public benefit.”

“We continue to urge CDI to work cooperatively with the insurance industry in asking for data to actively determine if companies are non-renewing customers, and if they are, whether regulatory and rating changes would address any need for improvement,” Dunmoyer said.