Where, as here, the Legislature uses open-ended language that implicates policy choices of the sort the agency is empowered to make, a court may find the Legislature delegated the task of interpreting or elaborating on the statutory text to the administrative agency\u2026 An agency\u2019s choice regarding the use of rulemaking or adjudication implicates the expertise and accountability rationales that cut in favor of deference to the agency, and the [insurance industry] does not contend that any statute expressly limited the commissioner\u2019s ability to choose between rulemaking and adjudication,\u201d the court wrote.<\/p>\n

In this instance, the Commissioner undertook an investigation into the widespread problem of underinsurance and, in particular, the disconnect between a homeowner\u2018s expectation and the actual scope of insurance coverage purchased. Based on that investigation, he determined that an incomplete replacement cost estimate \u2014 i.e., an estimate that fails to account for all of the costs necessary to rebuild the structure \u2014 qualifies as \u2015a specific kind of misleading statement, and that regulation of any misleading statement \u2015is authorized by the broad statutory prohibition against false and misleading statements\u2016 in section 790.03, subdivision (b).<\/p>\n

An agency\u2018s choice regarding the use of rulemaking or adjudication implicates the expertise and accountability rationales that cut in favor of deference to the agency, and the [insurance industry] does not contend that any statute expressly limited the Commissioner\u2018s ability to choose between rulemaking and adjudication. We therefore defer to the Commissioner\u2018s decision to address the problem of underinsurance by rulemaking.<\/p>\n

Finding otherwise would not only cut against the grain of our previous decisions and the importance they ascribe to the agency\u2018s expertise in deciding how it makes policy, but would also eviscerate section 790.10. It is the agency\u2018s prerogative to promulgate reasonable rules and regulations \u2015as are necessary to administer\u2016 the Unfair Insurance Practices Act (\u00a7 790.10) \u2013\u2013 not merely to do so where it cannot otherwise address offending conduct through enforcement actions.<\/p>\n

It follows that the Commissioner\u2018s authority under section 790.06 to determine what undefined conduct qualifies as unfair or deceptive is irrelevant to the question whether the Commissioner had the authority to regulate incomplete replacement cost estimates as misleading statements within the meaning of section 790.03, subdivision (b).<\/p><\/blockquote>\n

The court also explained why a replacement cost estimate that is incomplete and inaccurate should be considered an unfair insurance practice:<\/p>\n