Sen. Ben Allen (D-Pacific Palisades) introduced SB 1209, a bill sponsored by Insurance Commissioner Ricardo Lara that would grant the California Department of Insurance new authority to compel insurers to address violations identified during regulatory examinations.
Under current law, department examiners may identify serious problems in an insurer's operations, governance, financial, rating, underwriting or claims practices but lack the authority to require companies to immediately correct those issues without pursuing separate enforcement action.
SB 1209 would require insurers to comply with Report of Examination directives within a defined timeframe, authorize the department to assess penalties if companies fail to correct identified violations, provide due process protections through a hearing before penalties are imposed, and strengthen the department's ability to enforce existing statutes and regulations that protect policyholders.
"Identifying systemic problems should always be followed by immediate corrective action," Allen said. "The Department of Insurance has been utilizing important tools, over decades, to analyze and scrutinize insurance industry practices, but has lacked needed authority that would result in more timely solutions."
Commissioner Lara framed the bill as a response to growing pressures on California's insurance market.
"As climate change and new technologies reshape insurance, SB 1209 gives us the modern oversight tools needed to keep coverage reliable and our market stable," Lara said. "This bill builds on the reforms we've advanced to help companies anticipate emerging risks and address long-term solvency challenges before they harm Californians in an already fragile market."
The legislation is part of a broader state effort to modernize California's insurance regulatory framework amid climate-driven disasters, inflation and global reinsurance pressures. SB 1209 is expected to be heard in its respective policy committee for a vote in the coming weeks.
Edited by SMDP Staff