State Filings

By: Barbara Glasbrenner & John Mooney

Benjamin Franklin once stated, “An ounce of prevention is worth a pound of cure.” This is certainly the case when submitting an insurance filing to a State Department of Insurance (“DOI”). Preparing a meticulous and comprehensive submission can help mitigate issues, but it doesn’t necessarily eliminate the possibility of objections from the DOI.

Objections arise for various reasons, including but not limited to regulatory changes, interpretation differences, and jurisdictional nuances. When the dreaded form or rate interrogatory is received, here are some best practices from our experienced insurance filing support teams.

Don’t panic

Despite your best efforts to submit a complete, comprehensive filing, it is always possible that you will receive objections from one or more DOIs. The more lines of business you write and the more jurisdictions you operate in, the more likely you are to receive an interrogatory. Each DOI has specific filing and supporting documentation requirements – some with commonalities. Accepting objection letters and responding promptly are simply processes that enable you to move quickly, adjust the filing, and move closer to approval.

Read carefully and respond thoroughly

If an objection is not answered correctly, it will delay the filing’s approval. Thoroughly read each objection and only answer the question asked. Each objection should be responded to professionally, clearly, and concisely. The response should be complete and provide adequate supporting documentation, but without providing extraneous answers that may not be relevant to the respective objection. Submit your response for peer review or return to it with fresh eyes to confirm all the above have been addressed.

Make it easy for the reviewer

Provide necessary documentation in a manner that is easy for the regulator to address each interrogatory sufficiently. Logically rename file attachments and reference file names within the responses, where applicable.

If you revised a form, rating, or other piece of supporting documentation based on an objection, make a clear note in your response (e.g., “XYZ document has been revised and is attached [see FILE NAME] and replaces the first version of the same document.”)

In short, make it straightforward for the reviewer to follow the changes from the initial submission to the objection to the revision.

Reach out

Statute interpretations vary by jurisdiction, so a lack of understanding of why you did not fulfill a regulatory requirement does not necessarily indicate a shortcoming on your part. Not only are some statutes interpreted differently across regions, but the wording is sometimes vague.

If your objection letter contains an item you don’t understand, do not be afraid to contact the DOI directly, either through email, phone, or video call. Discussing the objection via video call has benefits, especially if you have received the same objection multiple times. Putting a face to a name and connecting personally with a person at the DOI can help you quickly clarify what you need to correct so the approval process doesn’t stall.

Track dates meticulously

Responding to the objection(s) by the date provided by the regulator is important. Response(s) not received by the due date could result in additional delays in the filing (e.g., disapproval). However, if you believe you will require more time than the state allows, submit an extension request as early as possible to give the reviewer time to assess and issue a revised due date. Note that some states have limitations on when extensions must be requested and how many extensions may be allowed.

Keep files and correspondence organized

Before submitting the responses and supporting documentation, ensure all documents are organized and correctly attached. Always double-check responses for accuracy and completeness, making sure you have read all pages of the objection letter (a common mistake is failing to see and respond to questions on subsequent pages). It is also important to submit the information as requested by the regulator (e.g., as part of the response, SERFF Supporting Documentation).

Leverage technology to stay organized. Tracking software like StateFilings.com was explicitly developed to align with the insurance state filings process, enabling users to store and track submissions, due dates, correspondence, and supporting documents in a central, secure repository. Two-way integration with SERFF allows users to post filings to each state, receive communications directly from DOIs, and track due dates – all in one place.

Stay professional

Responding to objections might cause frustration, but always reply to interrogatories with a cooperative attitude. Don’t take the objection personally. At the end of the day, the regulator is just doing their job. In any communication, written or verbal, treat the regulator with respect. Remember, regulators share your objective of arriving at an approved submission. Using a kind tone demonstrates professionalism, which opens the door for further communication.

Research

It can help to review previously approved filings and search for responses to similar objections. If you use an example of a previously approved filing, be prepared, as the filing may have been approved in error. While a level playing field among companies is important, each filing must be looked at on a case-by-case basis. If the previously approved filing language is a clear-cut violation of a statute, administrative rule, or commissioner’s order, the DOI may respond that it will ask the approved company to file and correct the approval error.

Rely on experts

Managing multiple filings across all jurisdictions is a logistical challenge for insurance companies at every scale. Partnering with actuarial consulting and insurance filing support teams like the experts at Perr&Knight can save time, clear up questions, and accelerate speed-to-market. Our industry veterans possess decades of experience submitting filings in all 51 U.S. jurisdictions across all lines of business. Leveraging this expertise can help streamline your filings. We can provide guidance at any stage of the state filings process, including support for objections to filings we did not initially submit. We’re here to help at any point in the process – even under tight deadlines.

It’s crucial to anticipate potential areas of concern and address them proactively to minimize delays and ensure a smooth approval process. When responding to the DOI’s objections, especially the “tough” interrogatories, it is essential to be thorough, clear, and prompt. By following these strategies, you can effectively respond to filing interrogatories and enhance the likelihood of a favorable outcome.

Contact Perr&Knight today to speak with our insurance filing support team.

As mentioned in the Potential Impacts of the LA Fires on California’s Property Insurance Marketplace blog, the possibility for assessments from the California FAIR Plan loomed large. That fear has become a reality, as the FAIR Plan, on February 11, 2025, levied its first assessment to member companies since 1994. The assessment totaled $1 billion and will be assigned based on the market share of the member companies. For the largest insurers in the state like State Farm, these assessments add many millions of dollars to the already significant bills they owe in the aftermath of the fires. Now that assessments have been made, what does it mean for the state’s property insurers beyond just the large bill?

$1 Billion Today, More in the Future?

Though the total assessment of $1 billion is significant, it does not necessarily mean that it is sufficient to cover all of the FAIR Plan’s costs. It is possible that the $1 billion amount was chosen specifically to coincide with the Commissioner’s September 3, 2024 Bulletin that laid out the rules for companies to recoup a portion of those assessments. That bulletin allows insurers to submit rule filings to the California Department of Insurance (“the CDI”) for approval to enable insurance companies to recoup up to 50% of those assessments in the form of a “temporary supplemental fee” that would be charged to policyholders over a period of 24 months. The FAIR Plan has said that roughly 97% of the claims submitted so far have been residential, which means the personal lines assessment is already close to that first billion. The FAIR Plan’s estimated exposure in the Palisades alone is $5 billion, so the potential threat of future assessments down the road is still very real. Once the assessments go beyond $1 billion in one calendar year, the bulletin allows that recoupment percentage to increase to 100%. Insurers may file to recoup as much as possible, so future assessments could add significant cost to the residential property premiums that are already straining consumers.

The CDI and the FAIR Plan are aware of the risk of future assessments and what it could mean for California residents, so the state has already begun enacting measures to try and make sure that doesn’t happen. For starters, Assembly Bill 226 (“the Bill”) was introduced by the state in January. The “FAIR Plan Stabilization Act” would allow the state to issue bonds to support the FAIR Plan to help it recover from large-scale disasters and increase its ability to pay claims. The bonds could help pay policyholders to begin rebuilding their lives, which is something that is sorely needed. The earlier the reconstruction efforts start, the better.  It is unclear, however, how much the FAIR Plan might need in bonds, and it would not save insurance companies from the risks of future assessments. The Bill requires the FAIR Plan; if supported by bonds, lines of credit, or any other payment mechanism; to assess insurance companies “in the amounts and at the times necessary to timely pay in full all obligations.” So, while the BIll could help prevent further assessments in the short term, companies may still be exposed to more assessments in the long-term, and this time, it could come with interest.

Will Consumer Groups Stop Recoupments?

As mentioned, FAIR Plan assessment recoupments require a rule filing in order to implement the temporary supplemental fees and recoup their FAIR Plan assessments. Despite the very unique nature of these filings, they would still be subject to the public review period required by Proposition 103. The public review period allows an interested party, such as a consumer group, the opportunity to intervene on these filings. One consumer group that seems to have plans for review of these recoupment filings is Consumer Watchdog. In a public statement, Consumer Watchdog argues that insurance companies charging policyholders for FAIR Plan assessments is “contrary to the law” because the statute enacting the FAIR Plan requires insurers, not consumers to “participate proportionally in the “writings, expenses, profits, and losses” of the Fair Plan.” There is also a question about the legality of insurer’s abilities to implement the temporary fees if their reinsurance providers cover the FAIR Plan assessments as companies like Mercury General Corporation have indicated publically. The executive director of Consumer Watchdog is on record saying that they will “be exploring every legal option to protect (consumers) from those surcharges” (https://calmatters.org/economy/2025/02/homeowners-insurance-costs-rising-in-california-fair-plan/). 
It seems like a safe bet that the FAIR Plan assessment filings will be challenged by the consumer groups, but how successful they will be in limiting or even stopping these FAIR Plan recoupments remains to be seen. 

Do Commercial Carriers Understand Their Bill?

It is well known that the assessments are billed to insurers based on market share, but insurers should be mindful of how that market share is determined. This is especially true for commercial insurers who may have received a much larger bill than expected after seeing the commercial side received just 3% of the total assessment. The participation rates for the residential assessments can include allied lines premiums when calculating the participation rates, even though many carriers have premiums in that annual statement line that are exclusively commercial. This has led to situations where an insurer who only writes commercial business receives a much larger-than-expected bill because they are receiving a portion of the residential bill. Companies can send corrections to the FAIR Plan to get their participation rates adjusted, but they are only given 30 days to do so which means as of now, it is likely too late to correct for this most recent bill. Commercial carriers should be sure to make any necessary corrections to participation rates now to prevent overstated bills moving forward.

How Quickly Will Companies be Able to Implement the Temporary Fees?

While debates about the validity of the supplemental fees go on in the background, they will not deter companies from making FAIR Plan assessment filings. For the first billion in assessments, many commercial carriers may have assessment bills so small that it may not warrant the cost of implementing the supplemental fee. We expect that the vast majority of personal lines insurers in the state, however, will make filings to add the supplemental fees to their programs given the heavy weighting of assessments to residential the residential side.  

The current rules laid out by the CDI allow supplemental fees to be filed as a pass-through to reinsurers, so even companies with coverage for the assessments will likely make a filing to get as much back as possible for their reinsurance partners. This means that the CDI could be receiving a lot more filings than normal in a relatively short amount of time, with the potential to impact department review times, not only for these filings but for pending filings and/or subsequent filings unrelated to the FAIR Plan. The hope is that the clear filing requirements laid out by the CDI will make the filings easy to review and allow these filings to be reviewed quickly, but until the full scope of the filings is known, that remains only a hope. It is unclear what role public intervention on these filings will play, as well. With all these uncertainties, it is of the utmost importance that any filings submitted for these temporary supplemental fees be clear and complete to help facilitate the quickest possible review. The actuarial consultants at Perr&Knight have already been contacted by multiple companies about doing just that, and is well equipped to get companies on the road to offset the costs of the recent FAIR Plan assessments.

Contact the state filings experts at Perr&Knight today.