CA| The California Department of Insurance Bulletin 2025-11 warns insurers that using negotiated, mutually-agreed-upon rates, retrospective rating plans, Large Risk Alternative Rating Options (LRAROs), or consent-to-rate arrangements—without having filed and received approval for specific rating factors and formulas—likely violates Proposition 103’s rate approval requirements for property and casualty insurance. Insurers using these unapproved practices must immediately stop, notify the Department, and submit proper rate filings to comply. Noncompliance may result in enforcement actions and substantial penalties.
Key points:
- Insurers must not use customized or negotiated rating plans for property and casualty policies unless the rates, factors, and formulas are filed and approved under Proposition 103.
- Immediate cessation and Department notification are required from insurers with unapproved rating arrangements, followed by compliant rate filings.
- Failure to comply may result in Department enforcement actions and significant penalties for willful violations.