How does Proposition 103 affect California auto insurance rates?

Proposition 103, passed by California voters in 1988, requires auto insurers to obtain California Department of Insurance approval before implementing any rate change. Insurers must submit actuarial justification showing that the proposed rate is adequate, not excessive, and not unfairly discriminatory. CDI reviews each filing and can reject, reduce, or approve as submitted. California drivers can formally challenge a filing through the intervenor process.

Do California auto insurers have to file a new rate request every year?

Not necessarily. California carriers file rate adjustments when their loss data indicates a change is warranted, which may happen multiple times per year or not at all in a given cycle. Changes in state law, such as the AB 1107 minimum-limits increase, typically trigger a mandatory refiling cycle for affected policy forms regardless of the carrier's underlying loss trend.

What is a combined ratio and why does it matter for California drivers?

A combined ratio measures an insurer's losses plus expenses as a percentage of premiums earned. A ratio below 100 percent indicates an underwriting profit; above 100 signals a loss. Carriers reporting improved combined ratios, as Progressive did in Q2 2026 per Insurance Business America, face less actuarial pressure to file large California rate increases in subsequent periods, which can moderate the size of future CDI-approved adjustments.

Can California auto insurers use credit scores to set rates?

Under Proposition 103, California prohibits auto insurers from using credit-based rating factors to set auto insurance premiums. California law does not permit credit scores to determine auto rates; carriers must instead rely on driving record, miles driven, and vehicle type as primary rating factors under CDI's approved rating plans.

California Carriers Filed 2026 Auto Rate Adjustments as National Profitability Rises

California auto insurers submitted dozens of rate adjustment filings to the California Department of Insurance in the first half of 2026, as carriers nationwide reported improving underwriting profitability after years of losses. Progressive Insurance reported increased Q2 2026 net premiums written alongside an improved combined ratio in June, according to Insurance Business America, signaling a broad recovery in auto carrier finances that is already influencing the pace and size of rate requests in California.

The turnaround comes after three consecutive years in which repair costs, medical inflation, and litigation expenses drove California auto claims higher. Carriers that posted losses during that stretch have been cycling catch-up filings through the California Department of Insurance review calendar, and their results are beginning to show.

Why Are California Auto Rate Filings Piling Up in 2026?

California's prior-approval rate system, established under Proposition 103, requires every auto insurer to justify rate changes before they take effect. The California Department of Insurance must review each filing and can demand supporting data on claims costs, expenses, and projected loss ratios before issuing a decision.

Carriers that absorbed elevated claim costs from supply chain disruptions, rising medical inflation, and increased litigation expenses over the past three years have been working through catch-up filings since 2023. According to Insurance Journal, multiple major carriers including CSAA Insurance Group, Mercury General, and Progressive filed California auto rate adjustment requests in 2026. Those filings reflect both past losses and, increasingly, an improving national underwriting backdrop.

Insurance Business America reported that Progressive's Q2 2026 results showed premiums written growing year-over-year while the June combined ratio moved below prior-period levels, an indicator that the largest US auto insurer by premiums written has stabilized its loss picture. Because California operates under Proposition 103's actuarial-justification requirement, carriers with improving national results may file smaller adjustments or withdraw previously submitted increases if the supporting loss data no longer justifies the original request.

What Does AB 1107 Mean for California Auto Rate Filings?

California Assembly Bill 1107, which took effect under a phased schedule beginning in 2025, raised the state's minimum auto liability limits from 15/30/5 to 30/60/15, requiring insurers to refile rates on policies carrying those minimum limits. Insurance Journal reported that the new limits triggered a round of supplemental rate filings from carriers that needed to reprice the revised mandatory coverage layers.

For California drivers, the minimum-limits change means higher baseline premiums for the lowest coverage tier, even before any carrier-specific rate adjustment takes effect. Drivers who carried only the previous statutory minimum now hold coverage that must meet the 30/60/15 floor, and their renewal premiums reflect both the expanded coverage and any actuarially justified change in the carrier's California auto loss experience.

The California Department of Insurance reviews those filings under the same Proposition 103 prior-approval framework and can reject or order reductions on any filing that does not meet the actuarial-support standard.

What Should California Drivers Expect Through the Rest of 2026?

The rate outlook for California auto drivers in the second half of 2026 depends on three converging factors: carrier profitability trends, CDI review timelines, and claim severity data. Insurance Business America noted that Progressive's improving combined ratio is consistent with a broader national trend of auto carriers reaching underwriting breakeven or better after the 2022-2024 loss cycle.

That national trend may not fully translate to California, however. Proposition 103 requires each carrier to demonstrate California-specific actuarial need, so a carrier with improving national results must still show its California book of business warrants any requested rate change. CDI can and does order independent actuarial reviews for large or contested filings.

Insurance Journal's coverage of CDI activity through mid-2026 shows the department maintaining an active review docket, with decisions on major filings expected through the third quarter. Drivers who believe a rate change on their renewal is unjustified may request an informal rate review from CDI or retain an intervenor under the Proposition 103 process.