California threatens penalties over insurers’ stalling tactics against car insurance buyers

California’s insurance commissioner is warning of a possible crackdown against insurers that fail to offer and sell auto insurance to the state’s good drivers.

Commissioner Ricardo Lara said this week that the insurance department has received “numerous” consumer complaints about waiting periods, questionnaires and other insurer practices that could violate state laws, as CalMatters detailed in a recent story. Lara issued a bulletin threatening enforcement action against insurance companies as a result, and asking insurers to contact the Insurance Department’s legal division if they have questions.

Ricardo Lara
Ricardo Lara 

“These alleged passive-aggressive tactics by insurance companies to slow down drivers’ access to coverage are unacceptable, dangerous, and will not be tolerated,” Lara said in a press release Thursday.

Lara’s spokesperson, Michael Soller, couldn’t say Friday exactly how many complaints the state has received, but said they came from the department’s consumer hotline, from legislators and local officials who were hearing from their constituents, from insurance agents and brokers, and from consumer groups.

In the bulletin, Lara detailed tactics that he said are improper for insurers to require as part of an auto-policy application, including requiring applicants to: complete questionnaires that are too long; verify school or employment information; respond to physically mailed questionnaires even when applicants elect to receive documents electronically; provide information about excluded drivers living at the same address; and provide copies of utility bills, vehicle registrations and photos of driver’s licenses or vehicles.

Walter Roberts, an insurance broker for an independent agency, shared with CalMatters screenshots that showed the delays some drivers have been subjected to, as well as some of the requirements Lara mentioned as being improper.

Roberts said he has been in the business for 30 years and this is the “hardest market ever,” which makes him glad he is retiring at the end of the month.

“It’s a good time to get out,” Roberts said. “It’s not very fun dealing with it on a day-to-day basis.”

The insurance commissioner’s bulletin reminded insurers that they must publicly file all changes they make before implementing them; that they have 15 business days after receiving an application to bind coverage; and that they must offer and sell auto insurance to anyone who qualifies as a good driver — a person who has had a license for the past three years, does not have more than one point on their record within that period and has not been at fault in an accident that resulted in injury or death. In addition, insurers are required to provide discounts to good drivers.

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