News: 2009 Press Release
For Release: January 27, 2009
Media Calls Only: 916-492-3566
Commissioner Poizner Announces 6% Fee Reduction for Thousands of Small Businesses and Individuals, Renews Commitment to Consumer Protection
Unprecedented Cut in Fees for more than 300,000 Insurance Agents, Brokers and Adjusters; Consumer Protection and Fraud Fighting Programs Enhanced
Insurance Commissioner Steve Poizner announced a number of fee reductions today resulting in $10.3 million in annual savings including a six percent fee reduction for more than 300,000 licensed insurance agents, brokers and adjusters - the vast majority of whom work in California's small businesses.
"It's important for government to operate as efficiently as possible - and this is especially true in tough economic times," said Commissioner Poizner. "After completing a top down review and implementing a permanent 10 percent cut in the Department's budget, we are able to reduce the fees CDI charges. This is great news for the thousands of small businesses and individuals who pay these fees."
The six percent reduction will apply to hundreds of fees charged by CDI. The most common fee is paid by agents, brokers and adjusters for their licenses. Going forward, the cost of renewing a license will decrease from $144 to $135. The total savings for license renewals alone will be $3.5 million annually.
By law, the Insurance Commissioner is empowered to increase or decrease most insurance fees by 10 percent without legislative approval. This is the first time in the Prop. 103-era that an elected Commissioner has reduced fees:
|January 1, 1992
||Increase - 10 percent
|July 1, 1999
||Increase - 10 percent
|November 1, 2002
||Increase - 5 percent
|January 1, 2004
||Increase - 10 percent
|July 1, 2009
||Decrease - 6 percent
In addition to the six percent fee reduction, Commissioner Poizner also lowered two other fees:
- Currently, a 30 cent surcharge on auto insurance policies is scheduled to sunset in 2010 and is used to support consumer activities related to automobile insurance. This includes five cents for the California Low Cost Auto Insurance program and 25 cents to fund consumer service activities and related complaint investigation work. A portion of the surcharge was originally intended to fund a backlog of auto insurance complaint investigations that has now been significantly reduced. Commissioner Poizner is proposing to extend the sunset on this program by five years and reducing the 30 cent rate to 20 cents to reflect the successful backlog reduction. This reduction will have no impact on the California Low Cost Auto Insurance program and is estimated to save Californians $3 million.
- When Commissioner Poizner took office in January 2007, CDI faced massive vacancies in the fraud division that threatened CDI's ability to crack down on insurance fraud. The legislature granted CDI the authority to raise a special fraud assessment paid by insurers to $5,100 to enhance recruitment and retention efforts and fill vacant positions. While the vacancies have been filled, employee recruitment and retention funding pay proposals have been delayed due to the state's current budget problems. Thus, Commissioner Poizner is reducing the special fraud assessment from $5,100 to $2,100 reflecting those delays. The expected cut will result in approximately $3.8 million in savings for ratepayers.
"Despite budget cuts and fee reductions, the Department remains committed to protecting consumers," said Commissioner Poizner. "In the last two years, CDI has arrested more people for fraud-related crimes than any two-year period under any previous insurance commissioner. This year, I am proposing to increase the amount of money granted to local district attorneys to fight insurance fraud from $51 million to $66 million."
10 Percent Permanent Cut in CDI Budget
Earlier this month, Commissioner Poizner announced that he would voluntarily reduce the CDI's operating budget by 10 percent by applying sound business practices to government. Commissioner Poizner, a Silicon Valley entrepreneur who received a master's degree in Business Administration from Stanford University, achieved the savings in three steps. First, CDI created a strategic plan to clearly define its priorities. This is the first time such a plan was done in at least 30 years. Next, the Department performed a top-down review to better align CDI's resources with its priorities and to identify opportunities to streamline operations and increase efficiencies. Finally, the Department conducted a business process survey that identified additional efficiencies.
When these efforts were completed, the Commissioner concluded that reductions could be made in overhead expenditures and vacant positions to permanently reduce CDI's operating budget by 10 percent and consequently, fees could also be reduced by 6 percent.
This reduction equates to savings of approximately $13 million per year. The reduction will not impact funding for statutorily mandated costs such as grants distributed to local law enforcement governments that are used to fight insurance fraud.
Please visit the Department of Insurance Web site at www.insurance.ca.gov. Non media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Callers from out of state, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
If you are a member of the public wishing information, please visit our Consumer Services.