As for those refunds, Californians are still waiting for about $3.5 billion of the $5.5 billion that Consumer Watchdog estimates policyholders are owed for pandemic-era overcharges.
The matter still hasn’t been fully resolved, say the state’s insurance officials, who argue that rate hike decisions aren’t interfering with unfulfilled rebates.
“These are separate processes,” said Michael Soller
TBF, that’s overcharged in a very insurance-specific sense, not a mustache-twirling fraud sense. Effectively they didn’t adjust prices fast enough to the actual changes in risk, which on the whole seems like something best dealt with ex post, not ex ante.
> Effectively they didn’t adjust prices fast enough to the actual changes in risk, which on the whole seems like something best dealt with ex post, not ex ante.
If the insurers could have it their way, they wouldn't have to adjust at all (for overcharging), while avoiding undercharging ahead of time. Oversight is necessary to counter misaligned incentives.
Right, this is a reasonable compromise between stability/profitability of risk-buyers and fair pricing for risk-sellers. Prices are unconstrained at transaction, but outsized profits can be clawed back.
How would they adjust prices for policies already sold and used, in the event the price for those policies was too low? Issuing refunds after the fact works in a way that issuing bills does not.
It is, it is just an adjustment in the cost of business (either positive or negative depending on whether it's coming from the business or the customer).
The matter still hasn’t been fully resolved, say the state’s insurance officials, who argue that rate hike decisions aren’t interfering with unfulfilled rebates.
“These are separate processes,” said Michael Soller
Don't forget fraud isn't covered in econ 101.