By Breck Dumas | Fox Business
California’s insurance crisis is expected to get even worse after the devastating wildfires raging in the state, and experts say a decades-old law plays a significant role in why insurance companies have fled the state in recent years.
In 1988, California voters passed Proposition 103, which gave the state’s Department of Insurance the power to approve rates or even roll them back. So, insurance companies that want to raise rates have to go through a regulatory process that can take months or even years, hindering their ability to adequately adjust rates to cover their losses and assess risk.
“Prop 103 is essentially price controls,” said Steven Greenhut, western region director for the R Street Institute in Sacramento. “It puts the kibosh on the ability of insurance companies to adjust the rates to meet the market.”