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News & Press: Sacramento Report

California Insurance Commissioner Wants Rate Review Due to New Tax Law

Tuesday, February 20, 2018  
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California Insurance Commissioner Dave Jones has directed his staff to commence a regulatory review of certain insurance rates citing a “major tax windfall” under the new federal tax rules that reduced the corporate tax rate from 35 percent to 21 percent. Jones noted that in California a prior approval process applies to property and casualty insurance rates and limits their profits. Jones is concerned that insurers whose profits are limited under California’s prior approval system will retain more of policyholder premiums as profit due to the change in the tax rate. Jones also directed his staff to consider and identify possible non-insurance businesses policyholders to see if they can benefit from the lower corporate taxes paid by their insurers. The limits on rates and the prior approval rate process is embodied in California’s Proposition 103 initiative that was passed in 1988. Title insurance was exempt from Proposition 103.

California Land Title Association

1215 K Street #1816 Sacramento, CA 95814-3905
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