ICLE on California’s Prop 103
Insurance News Net – A recent ICLE white paper on the failure of the insurance regulatory system created by California’s Proposition 103 was cited in a story in Insurance News Net. You can read full piece here.
A new white paper by International Center for Law & Economics said 1988’s Prop 103 rating system, which was intended to protect consumers from arbitrary insurance rates and encourage a competitive marketplace, was “slow, imprecise, inflexible, unpredictable,” and was of questionable value to the state’s unique rate-intervenor system.
“Prop 103’s suppression of property-insurance rates in the private market has contributed to an availability crisis and the shunting of policyholders into the surplus-lines market and the California FAIR Plan, both of which will inevitably have to raise rates accordingly to be able to meet their obligations,” the ICLE authors wrote. “Prop 103 has created an insurance market that struggles to work efficiently even in the best of times and is virtually impossible to sustain in periods of acute stress.”