Insurers collect $289 billion in premiums in California annually, making the state one of the largest insurance markets in the world. Commissioner David Jones discussed the opportunities and challenges California faces in providing coverage for all of the state’s 40 million residents at the Insurance Forum at Cal State Fullerton on Sept. 18.
From regulating the auto insurance market that serves millions of Californians to supporting the commitment to health care for all in the midst of turbulent political times in Washington, D.C., California Insurance Commissioner David Jones has a challenging job.
Since taking office in 2011, the former state assemblyman and legal aid attorney has streamlined the insurance provider licensing process, enabled portability across state lines, established an insurance mechanism for ride-sharing services such as Lyft and Uber, begun the process of updating car insurance regulations for the era of autonomous vehicles, and worked with industry partners to maintain wildfire insurance for homeowners in areas at risk due to climate change and development along the wildland-urban interface.
Providing Insurance for All Californians in Today’s Technological Landscape
Jones told attendees at the Sept. 18 Insurance Forum presented by Mihaylo College’s Center for Insurance Studies that the mission of the California Department of Insurance is two-fold.
“We are a consumer protection agency and we ensure healthy and robust markets,” he said. “We want to be fair in terms of our application and rules. Everyone has to be treated equally to ensure competition across the board.”
When Jones took office, he recognized that bureaucratic hurdles created unnecessary barriers in delivering quality insurance to Californians. For example, there were only a few locations throughout the state where insurers could pass licensing exams, and there were strict rules governing insurance policies across state lines. He made breaking down barriers to entry an integral part of his administration.
“We are very supportive of innovation, and we are starting to see new technology, new products and new ways of delivering insurance,” he said.
With the rise of online sharing networks such as Lyft and Uber as alternate transportation options and Airbnb as a home-sharing service, Jones recognized gaps in the insurance industry and worked with these tech startups to ensure that all parties involved were adequately insured.
He has also networked with innovators at Google Inc. to prepare for the rise of autonomous vehicles, which will likely render many insurance regulations and policies obsolete. While tech visionaries foresee the day when driverless cars rule the highways, Jones recognized that the DMV was not yet ready for this eventuality.
“It is important that we at the department understand this technology, and I know the industry is doing this too,” he said.
The Impact of the Natural and Political Climate
From cyberattacks to the Trump Administration, Jones sees a number of headwinds for California insurers.
He explained that cyberattacks, such as the breach that targeted millions of Anthem customers, are coming from individuals, bands of organized criminals and nation-state actors.
“It is not a matter of if, but a matter of when, so how do you try to limit the damage as much as possible?” he said. “Cybersecurity is top of mind for most business executives and we expect a lot of growth there.”
While recognizing that the Affordable Care Act is imperfect, Jones is very supportive of the signature Obama-era policy, which has provided health care for 5 million Californians. He said he is working with insurers in the health-care marketplace who are concerned about the uncertainty in Washington.
He also told insurers that the marijuana industry, legalized by California voters in November 2016, has become a lucrative market, as there are potential insurance gaps in the cannabis industry.
“This is a growth industry, whether you believe it was wise or not for voters to legalize. The demand is insatiable,” he said.
Looking at the impact of natural disasters and climate change, Jones said the state is somewhat insulated from the impact of the 2017 hurricane season, though wildfires are a major local challenge, with home insurers using complex predictive models in light of climate change, resulting in modest pullback in high-risk areas.
“The increase has been marginal at best, but it is something we are monitoring,” he said. “I am worried about the political backlash of people in foothill communities unable to get insurance.”
Cal State Fullerton’s Insurance Education Program
Mihaylo College’s Center for Insurance Studies (CIS) is the largest program of its kind in the United States west of the Mississippi River and the fourth largest nationally, with close to 1,200 students in the program this year. The annual Insurance Forum, sponsored this year by Armstrong/Robitaille/Riegle, is one of the center’s main events connecting insurance students, industry professionals and academics.
For more on CIS, visit the center online or at SGMH 4280, or contact Weili Lu, the center’s director, at 657-278-3679. The center hosts various speakers as well as academic undergraduate and graduate insurance programs, scholarships and job-placement resources.
Looking to get a head start on an insurance career? Information on student assistant and intern positions with the Department of Insurance is available online.