ICLE Cited in Insurance Business on Homeowners Insurance Rate Regulation

An article published in Insurance Business compares Colorado’s proposed insurance market interventions with California’s existing regulatory framework. The text references conclusions drawn by ICLE regarding the effects of California’s Proposition 103. The discussion details how prior-approval rate mandates and elected regulatory positions substitute political calculation for actuarial science in risk pricing. Read the full piece here.

California’s homeowners insurance crisis traces directly to Proposition 103, a 1988 ballot initiative that imposed a prior-approval rate regulation system, requiring insurers to obtain permission from the state before adjusting rates. The measure also converted the insurance commissioner from an appointed position to an elected one, injecting political considerations into what had been a technical actuarial function. The result, as the International Center for Law & Economics concluded, was that California was effectively telling insurers “to ignore the science” of risk pricing.