[The following is provided for informational purposes only. The authors do not make any comment on these regulations and do not certify that the following regulations are correct, complete and/or up-to-date. If you have questions as to the meaning and/or effect of these regulations, please seek advice from your attorney.]
ARTICLE 6: PROCEDURES FOR DETERMINATION OF RATES
§ 2646.1. Hearings
(a) Except under extraordinary circumstances, as found by the Commissioner or administrative law judge, direct testimony shall be given in writing and shall not be delivered orally. Where a party has shown that the purposes of the Administrative Procedure Act, Government Code section 11500 et seq., would be frustrated by requiring it to provide a witness' testimony in writing, that witness shall be permitted to give his or her direct testimony orally.
(b) The Commissioner or administrative law judge may limit the time for oral examination, may curtail repetitive arguments, and may require persons representing common positions to coordinate their presentations and to designate a common representative. In the interest of time, and consistent with the Administrative Procedure Act, Government Code section 11500 et seq., the Commissioner or administrative law judge may require matters to be submitted in writing in lieu of oral proceedings. Where necessary to a timely decision, the Commissioner or administrative law judge may direct that oral examination of witnesses be conducted by deposition and introduced in the record in writing, subject to the objections of all parties.
(c) Any order to expedite proceedings, such as by simultaneous examination of witnesses by deposition rather than in the hearing, shall not be entered without first giving due consideration to the effects on parties that may lack the resources to participate on such an expedited basis.
§ 2646.2. Certification of Questions to the Commissioner
(a) In any hearing before an administrative law judge, the administrative law judge may, on the motion of any party or on his or her own motion, certify a question to the Commissioner for determination during the proceedings before the administrative law judge.
(b) Certification shall be limited to matters that either (1) apply to numerous pending hearings; (2) are substantially in doubt and are so fundamental to the instant proceeding that absent certification there is a substantial risk that hearing time would be wasted; or (3) in the opinion of the administrative law judge, require immediate determination by the Commissioner in the interests of justice.
(c) The Commissioner may decline to answer the certified question without specifying any grounds. Denial of certification without reaching the merits is without prejudice to the party's right to raise the matter before the administrative law judge or the Commissioner.
§ 2646.3. Generic Determinations
(a) "Generic determination" means a finding the Commissioner is required or authorized by these regulations to make, which finding is intended to apply to the rate applications of several or all insurers.
(b) The generic determination shall be adopted as a regulation pursuant to chapter 3.5 ( sections 11340 through 11356 of the Government Code), upon final decision of the Commissioner, and shall be binding in hearings on individual insurers' rates.
(c) In a hearing convened for the purpose of making a generic determination, any person may propose that the pertinent data be disaggregated by geographic region, policy limits and deductibles, or amount of premium the insurer writes in the line and that separate determinations be made for each category. This subsection does not authorize insurer-by-insurer generic determinations.
(d) The Commissioner may, from time to time, review generic determinations to assess whether they are still sound. Such review may be on the Commissioner's own motion or on the petition of any person. Any such petition shall specify the changes in circumstances giving rise to the need for a revised determination.
§ 2646.4. Hearings on Individual Insurers' Rates
(a) This section applies to any request for a hearing on an individual insurer's rates, and applies to both requests made prior to a rate becoming effective and to requests concerning a rate in effect.
(1) A request for a hearing on a rate application shall be either delivered or mailed to the Department of Insurance within 45 days of the public notice specified in subdivision (c) of Insurance Code section 1861.05.
(2) A request for a hearing at any other time shall be based on the allegation that, pursuant to subdivision (a) of Insurance Code section 1861.05, a rate is "in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of" chapter 9 (commencing with section 1851) of part 2 of division 1 of the Insurance Code.
(b) A hearing on a rate application, and a hearing based on the allegation that a rate in effect is excessive, inadequate, unfairly discriminatory or otherwise in violation of chapter 9 (commencing with section 1851) of part 2 of division 1 of the Insurance Code shall be for the purpose of determining whether
(1) the insurer has properly applied the statute and these regulations in calculating the maximum or minimum permitted earned premium; or
(2) the maximum permitted earned premium or minimum permitted earned premium calculated on the basis of the statute and these regulations, should be adjusted as provided in section 2644.27. A request that the maximum permitted earned premium or minimum permitted earned premium should be adjusted is referred to as a "variance request."
(c) Relitigation in a hearing on an individual insurer's rates of a matter already determined either by these regulations or by a generic determination is out of order and shall not be permitted. However, the administrative law judge shall admit evidence he or she finds relevant to the determination of whether the rate is excessive or inadequate (or, in the case of a proceeding under Article 5, relevant to the determination of the minimum nonconfiscatory rate), whether or not such evidence is expressly contemplated by these regulations, provided the evidence is not offered for the purpose of relitigating a matter already determined by these regulations or by a generic determination.
§ 2646.5. Burden of Proof
The insurer has the burden of proving, by a preponderance of the evidence, every fact necessary to show that its rate is not excessive, inadequate, unfairly discriminatory, or otherwise in violation of chapter 9 (commencing with section 1851) of part 2 of division 1 of the Insurance Code.
§ 2646.6. Commissioner's Report on Underserved Communities
Definitions
For the purpose of these regulations, the following terms are construed as defined herein:
"Insurer" means those carriers admitted to transact the business of insurance in California and the California Fair Access to Insurance Requirements (FAIR) Plan.
"Underserved Community" means those communities which the Commissioner has determined are underserved as set forth in the "Commissioner's Report on Underserved Communities".
(a) Each insurer writing in any one of the lines of insurance set forth in Section 2646.6(b)(1)(A) through (D) below, with the exception of umbrella, excess or reinsurance coverages, shall compile and maintain, by experience year the information required by this section for that line of business, on or before March 1 of every year each insurer writing the coverages listed in (b)(1) below shall file a Community Service Statement with the Department of Insurance's Statistical Analysis Bureau in Los Angeles. The Community Service Statement shall contain a verification of an executive officer of the insurer, under penalty of perjury under the laws of the State of California, that the information contained therein is true and correct.
(b) Such information shall be compiled and maintained in a manner which will allow the insurer to report the information to the Commissioner for each Zone Identification Program ("ZIP") code in every county in California in which the insurer sells insurance or maintains agents:
(1) Premium Written & Earned; Exposure Written & Earned;
(A) private passenger automobile liability (including policies issued through the California Automobile Assigned Risk Plan);
(B) homeowners multiple peril (including policies submitted to, and/or gathered by the California FAIR Plan);
(C) commercial multiple peril, by ZIP code for the location of individual risks;
(D) fire (commercial and personal lines fire coverages should be maintained and compiled in such a manner as to allow them to be reported separately) including policies submitted to, and/or gathered by the California FAIR Plan;
(2) the Community Service Statement shall contain the number of service offices maintained in the ZIP code during the reporting period; (For purposes of this section, "service" means claims service, and sales service.) Where more than one service is performed at an office, the insurer shall categorize the office based upon the service or services provided at that office.
(3) the number of independent, employed or captive agents or agencies in the ZIP code during the reporting period;
To be counted for purposes of this section, an office must be open to the general public no fewer than 37.5 hours per week at least 50 weeks per year. A new office opened at any time during the reporting period shall be counted if it has been open at least 60 consecutive business days during the reporting period. An office closed at any time during the reporting period shall be counted unless it has been closed for more than 60 consecutive business days during the reporting period.
(4) for an insurer distributing through direct solicitation, the number of direct mail and telephone solicitations for new insurance business made during the reporting period to addresses in the ZIP code; the number of agents maintaining offices in the ZIP code during the reporting period who identified themselves as conversant in a language other than English, listed by language as specified below:
(1) Spanish
(2) Chinese
(3) Japanese
(4) Filipino
(5) Korean
(6) Vietnamese
(7) Other than English (includes those above and those not listed)
(6) the race or national origin, and gender, of each policyholder who is a natural person, as provided by the policyholder on a separate, detachable form that refers to the application. The form shall state that this information is requested by the State of California in order to monitor the insurer's compliance with the law, that the policyholder is not required to provide this information but is encouraged to do so, and that the insurer may not use this information for underwriting or rating purposes. The Department's form is available on the Department's website. No such information shall be used for purposes of underwriting or rating any applicant.
For purposes of this section, race or national origin means one of the following:
(A) American Indian or Alaskan Native
(B) Asian or Pacific Islander
(C) African-American
(D) Latino
(E) White
(F) Other
(G) Information not provided by policyholder.
(c) The Community Service Statement shall be subject to California Insurance Code section 1861.07 and the Commissioner shall, every year as soon as the information is available, issue the Commissioner's Report on Underserved Communities which will report those communities within California, designated by ZIP code, that the Commissioner finds to be underserved by the insurance industry. A community shall be deemed to be underserved by the insurance industry if the Commissioner finds:
(1)(A) the proportion of uninsured motorists is ten percentage points above the statewide average as reflected in the most recent Department of Insurance statistics regarding the statewide average of uninsured motorists; and
(B) the per capita income of the community, as measured in the most recent U.S. Census, is below the fiftieth percentile for California; and
(C) the community, as measured in the most recent U.S. Census, is predominately minority. Predominately minority community can be quantified as any community that is composed of two-thirds or more minorities as those groups are defined in subsection (b)(6)(A) through (D) herein; or
(2) the proportion of uninsured businesses or residences is ten percentage points above the statewide and/or Standard Metropolitan Statistical Area ("SMSA") average as determined by the Commissioner following a public hearing convened for the purpose of determining the number of uninsured businesses or residences in this state.
(d) The Commissioner's Report on Underseved Communities shall list for each insurance company doing business in California:
(1) the number and percentage of total exposures the company has in force insuring risks in the underserved communities and in all other communities, stated separately by line as listed in (b)(1) above;
(2) the number and percentage of offices maintained in the underserved communities and in all other communities
(3) for an insurer distributing principally through means other than direct solicitation, the number and percentage of its agents maintaining offices in the underserved communities and in all other communities
(e) The remedies in this section are in addition to any other remedy available to the Commissioner or to any other person.
§ 2646.7. Strategic Plans for Underserved Communities
[Repealed]
§ 2646.8. Submission of Evidence Demonstrating an Existing Presence in Underserved Communities
[Repealed]
§ 2646.9. Consumer Participation in the Commissioner's Decision to Accept or Reject a Strategic Plan for Underserved Communities or Evidence Demonstrating an Existing Presence
[Repealed]
§ 2646.10. Timelines for Commissioner's Review; Procedures for Submission of Corrective Plans or Revised Evidence
[Repealed]
§ 2646.11. Failure to Comply with Provisions of an Accepted Strategic Plan for Underserved Communities or Material Misstatement of Evidence Demonstrating an Existing Presence
[Repealed]