New California Department of Insurance Opinion on Underwriting Rules

On August 10, 2018, the California Department of Insurance took the unusual step of posting an opinion about underwriting rules used by property and casualty carriers who must file their rates for prior approval. The opinion notes that” underwriting rules” mean “any rule or factor used by an insurer in the process of examining, accepting, or rejecting insurance risks, and classifying those risks selected in order to charge the proper premium for each.” According to the opinion, “underwriting rules” also include eligibility guidelines. The opinion states that a rate application that does not include underwriting rules or denominates such underwriting rules as confidential is incomplete under the Insurance Code and does not require the Department to post notice of the filing (this posting is a necessary step in the approval process). In sum, any underwriting rules included in a rate application are available for public inspection. For a Department that has issued only four general counsel opinions since 2014, this is an unusual step, particularly since the statutes the opinion interprets have been law since the 1980s. Please click on the link here to review the full opinion.