The California Department of Insurance (CDI) is undergoing internal reforms, including hiring initiatives, as part of what Commissioner Ricardo Lara has described as the state’s most significant insurance overhaul in 30 years.
As part of this effort, the department is recruiting statewide for various positions, such as analysts, while also promoting from within and bringing in outside consultants. These steps aim to improve staffing ratios and accelerate the rate decision process, according to a department official involved in the regulatory reform.
According to AM Best, the initiative includes an evaluation of both current operations and future needs. On Aug. 21, the department posted over 20 job openings, primarily for analysts, investigators, and information technology specialists.
Promoting internal staff is also seen as a way to retain institutional knowledge and expertise, which is critical for performing complex tasks and training new hires, said department spokesperson Michael Soller.
The department is also working toward finalizing a "sustainable insurance strategy" by the end of the year, part of a series of reforms first announced 11 months ago. Among the regulatory changes, California regulators released a proposed catastrophe modeling and ratemaking regulation for public comment on August 16.
This regulation aims to encourage insurers to write new business in high wildfire risk areas. A public hearing on the matter is scheduled for September.
These regulatory changes are leading to the creation of new positions, including a model adviser who will oversee the pre-application process for rate filings that involve catastrophe models. This role will involve determining the required information and data that carriers must submit before using a model in a rate application.
The department is also scaling up its operations while maintaining the quality of its review process, according to Soller. He emphasized that consumer protection remains a top priority. Soller also noted that as the department enacts its reforms, the question will be whether insurance companies can scale up to meet consumer demand.
The department has expressed a desire to shorten the review times for rate filings. Under Proposition 103, passed in 1988, rate filings are deemed approved if the department does not take action within 60 days of public notice.
However, this timeline can be extended to 180 days if a hearing is held. The department's average review time for homeowners' filings from 2016 through 2023 was 196 days, though it can often take longer.
Gov. Gavin Newsom addressed this issue in a fast-track bill proposed with his state budget this year. The governor and the state legislature also allocated additional funds to the department to hire consultants to assist with rate reviews.
In an effort to adhere to the 60-day timeline, Lara recently announced that the department is developing a “data reconciliation tool” to help carriers ensure their filings are complete. This is part of a broader effort to streamline the rate review process.
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