ACIC Responds to CDI Notice on Insurers’ Use of Loss History Info. for Underwriting

The California Insurance Department’s draft advisory notice regarding
insurance companies use of claims databases and loss history in underwriting and rating has far-reaching implications, oversteps its boundaries and could dramatically increase insurance costs for consumers, according to the Association of California Insurance Companies (ACIC).

The ACIC recently submitted a letter to California Insurance Commissioner John Garamendi regarding the department’s draft proposal, noting that the advisory in its current form would substantially compromise the ability of insurers to accurately rate policies, minimize loss exposure and protect their current policyholders from higher rates.

“Further, the department’s advisory notice would impose new requirements not currently provided in statute or regulation, such as inspection and investigation requirements for virtually every single policy application and renewal,” Janine Gibford, ACIC’s government affairs advocate, wrote in the letter. “The advisory notice would have the effect of dramatically increasing insurance costs for consumers and make the completion of the underwriting process in a fair and efficient manner extremely difficult.”

Both the insurance department’s proposed advisory notice and ACIC’s full response and comments on the notice are posted on the National
Association of Independent Insurers’ Web site (www.naii.org).