Regulatory Compliance Consulting Firm

New Federal Tax Rates Requires California Insurers to Review their Rates

The California Department of Insurance has issued a notice reminding insurers to ensure that their rates are compliant with Proposition 103.


Due to the new Federal Tax Schedule for 2018 reducing the corporate tax rate from 35 percent to 21 percent, insurers may have fallen out of compliance with Proposition 103 by charging what the Department considers to be excessive, inadequate, or unfairly discriminatory rates. Proposition 103 implements a prior approval process, limiting the profits and rates of property and casualty insurers. The Notice reminds insurance companies with excessive rates that they are obligated to file a rate change application with the department to ensure they are complying with Proposition 103.


At the direction of the Commissioner, the Department commenced a regulatory review of insurer rate compliance following the federal corporate tax rate reduction. Additionally, the Commissioner has updated the Prior Approval Rate Making Regulation to reflect the tax changes.


For actuarial assistance in determining compliance and for filings assistance, please contact Wendy Farley ACAS, MAAA Director of Actuarial and Financial Services at or Wes Pohler, Vice President, State Filings at

Contact Westmont Associates, Inc.

Westmont Associates, Inc. tracks developments affecting the insurance industry, in addition to our other services.  If you have any questions, please contact us. | (856) 216-0220 |

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