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Disability Insurers Challenge ‘Underground Regulations’ In Court

Sacramento, CA — A group of insurance companies are suing the state over disability insurance rules.

In a lawsuit filed yesterday against state Insurance Commissioner John Garamendi, the companies are challenging what they call “underground regulations,” they say would boost the cost of disability insurance.

The suit was prompted by a letter that notified insurance companies in October that regulators intended to review disability policies to make sure they did not violate seven standards.

One of those standards includes a ban on discretionary clauses that give the insurer the authority to interpret terms and provisions in the policy.

The suit was filed yesterday in Sacramento by the Association of California Life and Health Insurance Companies America´s Health Insurance Plans, the American Council of Life Insurers