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The Supreme Court of California affirms insurers’ accountability to consumers

On Behalf of | Apr 2, 2021 | Insurance Law

In a recent decision, California’s Supreme Court affirmed that consumers have a right to dispute insurance rates that companies did not notify the CIC about. The court’s unanimous decision in Villanueva v. Fidelity National Title Company made clear that insurers’ have no statutory immunity against consumers and the CIC does not have exclusive jurisdiction over claims relating to rate hikes.

The court recognized that insurance companies have a fiduciary duty to their clients. They must set their rates fairly and transparently while adhering to all of the CIC’s guidelines.

The importance of consumer protection in insurance matters

Insurance is a field in which consumers could be particularly susceptible to unfair business practices. Insurers are duty-bound to safeguard their clients’ interests. However, advancing that objective may diminish profitability. Therefore, it is imperative that consumer protection regulations apply to insurance companies.

Fairness in ratemaking

California’s Unfair Competition Law prohibits ratemaking without authorization from the CIC in order to prevent exorbitant rates that could make insurance unaffordable or result in unjust termination of coverage. The court’s decision applied specifically to a matter involving title insurance, but the implications make clear that no insurers will be immune from suit for ratemaking violations.

The court’s decision is a powerful win for consumers. It signifies that individuals and businesses do not have to endure unfair treatment or contend with an uneven playing field. Consumers have legal remedies against insurers that fail to act in accordance with the law or attempt to take advantage of the clients who they serve.