California Department of Insurance 2020

2020 California Department of Insurance

ANNUAL REPORT OF THE COMMISSIONER

PROTECT PREVENT PRESERVE

August 1, 2021

RICARDO LARA

CALIFORNIA INSURANCE COMMISSIONER

The Honorable Gavin Newsom Governor, State of California State Capitol, First Floor Sacramento, CA 95814

Dear Governor Newsom,

The California Department of Insurance (CDI or Department) respectfully submits the 2020 Annual Report of the Insurance Commissioner as required by California Insurance Code section 12922. As set forth in statute, this report describes the condition of insurance business in California and the vital work we do at CDI regulating one of the largest insurance markets in the world.

Due to the challenges presented by the COVID-19 pandemic, Californians are relying more than ever on our pledge to uphold CDI's core mission of consumer protection. In 2020, the Department continued to provide essential services ? overseeing insurer solvency, licensing agents and brokers, conducting market conduct reviews, resolving consumer complaints, assisting disaster survivors, and investigating and prosecuting insurance fraud ? and expanded our efforts to support Californians. My team and I met with over 25,000 Californians, worked to protect insurance consumers from fraud, expanded access to health care, and have begun charting a roadmap to confront California's climate risks. The Department advocates for equality at every opportunity and champions legislation to create new consumer protections for wildfire survivors, domestic workers, and to stamp out discrimination in the Insurance Code.

CDI continues to build on these and other consumer protection efforts and looks forward to the work ahead. Should you have any questions regarding this report, please do not hesitate to contact me or my staff at (916) 492-3622.

Sincerely,

RICARDO LARA Insurance Commissioner

cc: Erika Contreras, Secretary of the Senate Sue Parker, Chief Clerk of the Assembly Senator Susan Rubio, Chair, Senate Insurance Committee Assembly Member Tom Daly, Chair, Assembly Insurance Committee Cara L. Jenkins, Legislative Counsel i

2020 Main Highlights

California Department of Insurance

Commissioner Lara issued a mandatory one-year moratorium on insurance companies non-renewing policyholders, protecting more than 2.4 million homes in wildfire disaster areas across the state. The action was the result of thenSenator Lara's enacted Senate Bill 824 (Chapter 616, Statutes of 2018).

Commissioner Lara took more than 20 separate actions to provide consumers and businesses relief from COVID-19, including ordering insurance companies to provide partial premium refunds for motorists due to lower risk on the road ? which resulted in $1.75 billion in relief to California drivers to date and nearly $2.3 billion for all COVID-19 impacted lines.

The Department held the first ever investigatory hearing with homeowners, first responders, fire experts and other stakeholders about the availability and affordability of homeowners' insurance.

CDI received 102 funding applications from District Attorneys in 37 counties. CDI awarded total funding in the amount of $72,675,287 to District Attorneys. District Attorneys prosecuted 2,913 cases involving 3,257 defendants and chargeable fraud of $2,131,747,910.

District Attorney prosecutions resulted in 1,008 convictions.

Commissioner Lara initiated a new partnership with the emergency and fire protection agencies in Governor Newsom's administration to develop a list of proven home and community wildfire mitigation measures.

Commissioner Lara led a national effort to reform federal policies that violated the right of all Californians to have equal access to healthcare and worked to remove disparities and discrimination particularly as it relates to the available health care treatment for women, members of the LGBTQ+ community, and for those living in lower income communities.

The Department settled allegations of improper marketing of the drug Humira with AbbVie Pharmaceuticals for a total of $24 million ($15 million going to the General Fund) and reform of their marketing practices.

CDI approved the formation of a new California domestic health insurance company, the first newly-formed health insurance company in California since 1998, which is a joint venture between Aetna Inc. and Sutter Health.

In 2020, our efforts to serve consumers culminated in 168,626 telephone calls and in-person assistance with 44,535 complaints closed.

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 The Department recovered $254,103,922 for consumers as a result of direct intervention on consumer complaints and market conduct examinations.

In response to Governor Gavin Newsom's stay at home order due to the COVID-19 pandemic, the Department transitioned majority of staff to telework while delivering consumer protection and work-related results that are consistent with prior years.

Because the COVID -19 pandemic and stay at home order fundamentally changed policyholder behavior, insurance company projected loss exposures became overstated. Accordingly, the Department ordered insurance companies to return money to policyholders, resulting in more than $2.29 billion in refunds to consumers and counting ? the most in the nation.

Despite the pandemic, Consumer Services staff deployed to 16 Local Assistance Centers and assisted 1,171 consumers face-to-face to help them receive additional living expense checks, contents advances, and to answer questions with regards to their rights and responsibilities.

To continue serving license applicants during the COVID-19 pandemic, the Department launched an online remote-proctored license examination service, which administered 9,126 online remote-proctored examinations from August to December 2020, accounting for more than 40 percent of examinations administered.

In response to the unprecedented wildfires and the COVID-19 pandemic affecting California's insurance consumers and businesses, the Department and Commissioner virtually met with and reached more than 25,000 consumers by hosting 106 legislative meetings,131 virtual and in-person events, and partnering with 85 legislative offices and 59 community-based organizations.

The Department launched the "Would You Like to Chat" Licensing Hotline feature and despite the pandemic, CDI's efforts to serve Licensing Hotline customers in 2020 culminated in 14,424 chats, 30,763 emails, and 73,254 telephone calls with an average of 10,464 hotline calls each month.

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2020 Organizational Chart

California Department of Insurance

OFFICE OF THE INSURANCE COMMISSIONER Conservation and Liquidation Office Enterprise Planning, Risk, and Compliance Office of Civil Rights

ADMINISTRATION & LICENSING SERVICES BRANCH Human Resources Management Financial Management Information Technology Licensing Services Administrative Hearing Bureau

CLIMATE & SUSTAINABILITY BRANCH Data Analytics and Reporting

COMMUNICATIONS & PRESS RELATIONS BRANCH

COMMUNITY RELATIONS & OUTREACH BRANCH

CONSUMER SERVICES & MARKET CONDUCT BRANCH Market Conduct Consumer Services

ENFORCEMENT BRANCH Investigation Fraud

FINANCIAL SURVEILLANCE BRANCH Field Examinations Financial Analysis

HEALTH POLICY & REFORM BRANCH

LEGAL BRANCH Regulatory & Legal Services Litigation

POLICY & LEGISLATION BRANCH

RATE REGULATION BRANCH Rate Regulation Rate Actuary

OFFICE OF THE SPECIAL COUNSEL TO THE COMMISSIONER

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