California Insurance Code & EthicsQuestion 42 of 158
Under Proposition 103, codified at §1861.05, before a personal auto or homeowners insurer can use a new rate it must:
a.Submit the rate to the Department of Managed Health Care
b.File the rate for informational purposes only
c.Obtain prior approval from the Insurance Commissioner
d.Receive automatic approval if no action within 60 days
Explanation
Section 1861.05, enacted by Proposition 103 in 1988, makes California a prior-approval state for property and casualty rates, including personal auto and homeowners. The rate must be neither excessive, inadequate, nor unfairly discriminatory, and the Commissioner must approve it before use.
Law Reference: Cal. Ins. Code §1861.05 (Prop 103)Practice all 158 questions free — no signup required.
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