SAN FRANCISCO – Arguments were heard on Nov. 1 in the California Supreme Court regarding the Association of California Insurance Companies (ACIC) versus Dave Jones, one of many California insurance commissioners, regarding regulations and possibly misleading issues around insurance costs.

Along with ACIC, the Property Casualty Insurers Association of America (PCI) is also involved. Both insurance parties argued that Jones, along with other California insurance commissioners "overreach their mandates with data calls and regulations that go beyond their mission and authority," according to the PCI press release. 

As noted in the press release from Jones defending the insurance regulations,  "The consumer-protection regulation was developed under Commissioner Steve Poizner and issued by Commissioner Dave Jones to address the problem faced by homeowners, whose homes were damaged or destroyed in the Oakland Hills and other fires, after discovering they were underinsured because the replacement cost estimates from their insurers left out key elements of the cost to rebuild their homes."

Nicole Mahrt-Ganley with PCI told the Northern California Record that the case deals with regulations for replacement costs. As the PCI press release noted, "This regulatory overreach trend is driving up costs for insurers and their customers in addition to impairing insurers’ ability to effectively serve their customers."

Both the ACIC and PCI have asked the California Supreme Court, "Does the Unfair Insurance Practices Act give the Insurance Commissioner authority to promulgate a regulation that sets forth requirements for communicating replacement value and states that noncompliance with the regulation constitutes a misleading statement, and therefore an unfair trade practice, for purposes of the act?" Their second inquiry is, "Does the Insurance Commissioner have the statutory authority to promulgate a regulation specifying that the communication of a replacement cost estimate that omits one or more of the components in subdivisions (a)-(e) of section 2695.183 of title 10 of the California Code of Regulations is a 'misleading' statement with respect to the business of insurance?"

Jones commented on the case as noted in his press release, "Yesterday the Attorney General's office presented a strong defense before the California Supreme Court that our consumer-protection regulations are lawful."

The problem with the state regulations is that homeowners do not know how much insurance to purchase if a disaster did occur, according to the Jones press release. The new insurance regulations for California were adopted in 2011 and deemed that any cost misleading in nature would be an invasion of the Unfair Insurance Practices Act. 

The insurance agents are to "work with the policy holders, especially when evaluating home insurance," Mahr-Ganley commented. 

"This lawsuit is yet another example where insurers want to block an important consumer-protection regulation and seek to limit the ability of the Insurance Commissioner to protect consumers," the Jones press release notes.

Mahrt-Ganley is hopeful the hearing "will come out in 90 days."

ACIC and PCI both work together in the insurance field as they write $20.2 billion in premiums in California, insuring 36 percent of the property casualty insurance sold in the state, as explained in the PCI release. 

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