California Insurance Commissioner-elect Jane Kim
SACRAMENTO — California`s insurance commissioner-elect, Jane Kim, promises aggressive consumer protections and a state-run insurance system for natural disasters, but the insurance industry still hopes for a team approach to stabilize the state’s insurance market.
“We congratulate Jane Kim on her election as California’s next insurance commissioner and look forward to working together to address the state’s ongoing insurance crisis,” Denni Ritter, vice president for state government relations for the American Property Casualty Insurance Association (APCIA), said in a statement. “While recent reforms are beginning to stabilize the market, the insurance crisis is far from over, and a full recovery will take time.”
Kim won the insurance commissioner race last week by defeating another Democrat, state Sen. Ben Allen (D-Santa Monica), by a margin of 53% to 47%.
Ritter said attempts by Kim to impose significant new rules or other requirements on insurers could backfire.
“Costly new mandates or regulatory actions that drive up costs or limit coverage options risk reversing this progress and worsening the crisis,” she said. “Insurers remain committed to working with Commissioner-elect Kim, Gov.-elect (Xavier) Becerra and legislative leaders to restore a stable market and ensure every Californian has access to the coverage they need to protect their homes, cars and small businesses.”
The law firm Eversheds Sutherland LLP, which represents multinational corporations, financial institutions and government agencies, reported in a recent JD Supra article that insurers can expect Kim to focus on protecting policyholders and enforcement rather than taking steps to expand capacity in the insurance market. In addition, expect more aggressive regulation, closer inspections of rate filings and more support for public challenges to rate increases, the law firm said.
“In short, we expect Commissioner Kim to aggressively pursue pro-consumer policies that may further constrain underwriting flexibility and will include increasing reliance on enforcement and consideration of public insurance options,” the article states.
In addition, Kim has said the current practice of private insurers seeking to “cherry-pick” low-risk property owners while sending higher-risk residents to the California FAIR Plan is not sustainable.
Advocacy groups such as Consumer Watchdog welcomed Kim’s election but cautioned that rolling out a state-run disaster insurance system would take years to build a consensus and to gain the state Legislature’s approval. It would also require identifying a stable funding source off the bat, according to Consumer Watchdog’s executive director, Carmen Balber.
“It’s a big lift,” Balber told the Southern California Record. “It’s not an impossible lift, but it will take time.”
For the short term, she urged Kim to focus on implementing forward-looking regulations to benefit homeowners, whose premiums have increased 84% over a six-year period ending in March of this year, and to improve the California Department of Insurance’s "atrocious" handling of consumer complaints..
"The commissioner in California is empowered with a vast array of tools to protect consumers … from bad-faith actions and to penalize (insurance) companies when they do wrong by consumers," Balber said.
There might be some grumbling from the insurance industry, but many of the insurance commissioner’s powers are uncontested when it comes to enforcement actions, she said.
The Insurance Fairness Project, a coalition that has raised awareness about climate-driven insurance issues, has urged Kim to work on increasing insurer accountability and industry transparency. That could include a requirement that the insurer of last resort, the California FAIR Plan, release claims data and financial reports to the public, the project said.
The coalition is also urging Kim to take action against oil and gas companies to secure payouts for the alleged impact of climate change on insurance issues – a legal strategy Kim hinted at in her victory speech.
“This fight is not just about insurance and our homes and our property,” Kim said. “It's a fight for our planet. And this office can and should be a leader in taking on not just wealth inequality and economic fairness … but to take on the climate crisis.”
