Gregory and Hanson Article Examines Impact of Calif. Department of Insurance Ruling on Insurtech Industry

Law360 has published the article “Calif. Public Disclosure Rule May Mean Trouble For Insurtech,” written by Nicholas Gregory and Shawn Hanson, counsel and partner, respectively, in the litigation practice at Akin Gump. The article examines a legal opinion last month from the California Department of Insurance pertaining to the state’s public inspection of insurance rates.

The article begins with some background on the public inspection approach seen in California. Gregory and Hanson write that a proposition passed in 1988 “provided for consumer participation in the administrative insurance rate-setting process,” and ultimately led to a law that requires a property and casualty insurer “to file a complete rate application with the commissioner before changing its rates,” at which point the application must be available for public inspection. One downside of this, however, is that insurers “have a vested interest in keeping proprietary underwriting models confidential.”

The recent ruling, the authors say, “signals a policy shift,” with the Department of Insurance concluding that providing public access to all information submitted to the commissioner is consistent with the statute’s goal of fostering consumer participation in the rate review process. As a result, Gregory and Hanson write, the opinion delivers “full-throated support to an open and transparent rate-setting process.”

The authors advise companies to be prepared, “whether determining in which jurisdictions to operate or considering proactively how to frame and disclose underwriting rules to ensure that they have provided a ‘complete’ rate application sufficient for approval.” They also predict that the issue will be decided by the courts “sooner rather than later.”

To read the full article, please click here.