§ 2697.3. Ratemaking.

(a) In setting its rates, the Authority shall be governed by the provisions of Insurance Code Section 10089.40.

(b) In order to establish or change any rate, the Authority shall file a complete rate application with the Commissioner. A complete rate application shall include: (1) all the data referred to in Insurance Code Sections 1857.7, provided, however, that the Commissioner may permit the Authority to state that required data in terms that are applicable to and reflective of the Authority's enabling statutes, its status as an instrumentality of the State of California, and its inherent characteristics; (2) the data referred to in Insurance Code Section 1857.9(a); (3) the data required by Insurance Code Section 1864; and (4) such other information as the Commissioner may require.

(c) The Commissioner shall notify the public of any application by the Authority to establish or change any rate. The application shall be deemed approved 60 (sixty) days after that public notice unless (1) a consumer or his or her representative requests a hearing within 45 (forty-five) days of public notice and the Commissioner grants the hearing, or determines not to grant the hearing and issues written findings in support of that decision, or (2) the Commissioner on his or her own motion determines to hold a hearing, or (3) the proposed rate adjustment exceeds 7% of the then applicable rate, in which case the Commissioner must hold a hearing upon a timely request. In any event, a rate change application shall be deemed approved 180 (one-hundred eighty) days after the rate application is received by the Commissioner (A) unless that application has been disapproved by a final order of the Commissioner subsequent to a hearing, or (B) extraordinary circumstances exist. For purposes of this section, “received” means the date received by the Department's Rate Filing Bureau in San Francisco.

(d) For purposes of subdivision (c), extraordinary circumstances include the following:

(1) Rate change application hearings commenced during the 180-day period provided by subdivision (c). If a hearing is commenced during the 180-day period, the rate change application shall be deemed approved upon expiration of the 180-day period or 60 days after the close of the record of the hearing, whichever is later, unless disapproved prior to that date.

(2) Rate change applications that are not approved or disapproved within the 180-day period provided by subdivision (c) as a result of a judicial proceeding directly involving the application and initiated by the applicant or an intervenor. During the pendency of the judicial proceedings, the 180-day period is tolled, except that in no event shall the Commissioner have less than 30 days after conclusion of the judicial proceedings to approve or disapprove the application. Notwithstanding any other provision of law, nothing shall preclude the Commissioner from disapproving an application without a hearing if a stay is in effect barring the Commissioner from holding a hearing within the 180-day period.

(3) The hearing has been continued pursuant to Section 11524 of the Government Code. The 180-day period provided by subdivision (c) shall be tolled during any period in which a hearing is continued pursuant to Section 11524 of the Government Code. A continuance pursuant to Section 11524 of the Government Code shall be decided on a case-by-case basis. If the hearing is commenced or continued during the 180-day period, the rate change application shall be deemed approved upon the expiration of the 180-day period or 100 days after the record is closed, whichever is later, unless disapproved prior to that date.

(e) Public notice required by this Section shall be made as required by Insurance Code Section 1861.06.

(f) With the exception of proprietary materials and documents owned or licensed by third parties, all information the Authority provides to the Commissioner pursuant to this Section shall be available for public inspection, and the provisions of Section 6254(d) of the Government Code and Section 1857.9 of the Insurance Code shall not apply to that information.

(g) Hearings shall be conducted pursuant to Sections 11500 through 11528 of the Government Code, except that: (1) hearings shall be conducted by administrative law judges for purposes of Sections 11512 and 11517, chosen under Section 11502 or appointed by the Commissioner; (2) hearings are commenced by a filing of a Notice in lieu of Sections 11503 and 11504; (3) the Commissioner shall adopt, amend or reject a decision only under Section 11517(c) and (e) and solely on the basis of the record; (4) Section 11513.5 shall apply to the Commissioner; (5) discovery shall be liberally construed and disputes determined by the administrative law judge.

(h) Judicial review shall be in accordance with Insurance Code Section 1858.6. For purposes of judicial review, a decision to hold a hearing is not a final order or decision; however, a decision not to hold a hearing is final.

(i) The rights provided by Insurance Code Section 1861.10 shall apply to all proceedings pursuant to which the Authority acts to establish its rates for earthquake insurance.

(j) If at any time the Authority for any reason has no valid rates in effect, or has rates in effect that are shown to be excessive, inadequate, or unfairly discriminatory, the Insurance Commissioner may approve, based on a complete rate application filed by the Authority, interim rates for Authority policies of residential earthquake insurance, and those interim rates shall remain in effect until the Commissioner approves an Authority rate that complies with the provisions of this Section.

HISTORY

1. New section filed 11-18-96 as an emergency; operative 11-18-96 (Register 96, No. 47). A Certificate of Compliance must be transmitted to OAL by 3-18-97 or emergency language will be repealed by operation of law on the following day.

2. Repealed by operation of Government Code section 11346.1(g) (Register 97, No. 14).

3. New section filed 4-1-97 as an emergency; operative 4-1-97 (Register 97, No. 14). A Certificate of Compliance must be transmitted to OAL by 7-30-97 or emergency language will be repealed by operation of law on the following day.

4. Repealed by operation of Government Code section 11346.1(g) (Register 97, No. 32).

5. New section filed 8-4-97 as an emergency; operative 8-4-97 (Register 97, No. 32). A Certificate of Compliance must be transmitted to OAL by 12-2-97 or emergency language will be repealed by operation of law on the following day.

6. Certificate of Compliance as to 8-4-97 order transmitted to OAL 11-26-97 and filed 1-13-98 (Register 98, No. 3).

7. Amendment of subsections (d)(3) and (f) filed 10-16-2002; operative 11-15-2002 (Register 2002, No. 42).

Note

Note: Authority cited: Sections 1861.05, 1861.06, 1861.10, 10089.11(d), 10089.40 and 12921, Insurance Code; andCalfarm Ins. Co. v. Deukmejian(1989) 48 Cal.3d 805, 771 P.2d 1247, 258 Cal. Rptr. 161. Reference: Sections 1857.7, 1857.9, 1864, 10089.11(a) and 12921, Insurance Code.