California Insurance

The California system of a group of consumers as a model for the automatic regulation of insurance, indeed, have kept California, consumers can enjoy billions of dollars in premium reductions during the last ten years. It is among the main results of an analysis of California, the regulatory system of a country seen insurance researchers.

“It is possible that consumers would be stored in California more than $ 10 billion during the last decade, when a competitive market, has been a function of the State”, instead of the provisions of Proposition 103 final suffocating, David Appel, Ph.D. In its document released Monday at the winter meeting of the National Association of Insurance Commissioners (NAIC).

Earlier this year, a report by the Consumer Federation of America (CFA) to the conclusion that the USA California, according to the provisions of the proposed 1988’s 103, should serve as a model for the State Insurance Supervision .

At the request of the Alliance of American Insurers, USA Insurance Association (AIA), the National Association of Independent Insurers (NAII) and the National Association of Mutual Insurance Companies (NAMIC), Appel, a revision of the CFA study.

In his study, call notes that political insecurity through the auto insurance prices approval of the proposal would cost 103 buyers of auto insurance in California between $ 8.6 billion and $ 13 billion.

“If the insurer 103 Proporta increases risk and, therefore, it is not discouraged more negative impact on premiums in response to the slow growth loss, the magnitude of this figure indicates that the effects of small could have the magnitude of a possible transaction rate “, live in a suite of Proposition 103, calling for knowledge.

Call other main conclusions were as follows:

* FSC regulatory standards of excellence “are incompatible with a modern conception of the role of regulation in a competitive market. In his paper, which puts FSC eight standards that the settlement of insurance must be measured - also known as “Standards of Excellence”. While some are inalienability of standards in their own business (ie make profits for insurers and fair treatment for consumers), as a whole to assess the state of the environment by regulatory extent of regulation or eliminating competition.

“All the CFA paper based on the philosophy that aggressive government intervention in the economy competitive is necessary to achieve the vision CFA” social “objectives”, concludes appeal. This view, he found, it is archaic and in general have been abandoned over the past two decades in favor of a market, competition and philosophy.

* CFA “objective analysis” of regulation results lack scientific rigor and the error is fatal. CFA conclusions are based on simplistic and false premise that consumers, given that expenditure - ie, for a total premium car - received during the same period, such as Proposition 103 was, indeed, it takes action to reduce it.

“The majority of requests CFA are based on an incomplete understanding of the relevant facts, even if not total mischaracterization,” Call to knowledge. “The rest of undocumented allegations of cause and effect relationships, which amount to little more than pretend that all changes from the bottom by Proposition 103 Proposition 103. These statements do not bear has attracted attention.”

* A serious analysis of California insurance premiums, said that Proposition 103 had no significant impact on the cost of auto insurance in California. The FSC paper ignores the fact that the main determinant of insurance rates to the underlying costs for claims Final Appeal. Over the past ten years, all three branches of government of California have implemented changes controlled, which was rapidly escalating costs.