California Insurance Commissioner Ricardo Lara has introduced a proposal to alter the state’s insurance rate-review process, sparking criticism from consumer advocates who say the plan would make it harder to challenge insurers’ requests for higher premiums. According to a recent CalMatters article, opponents have labeled the measure “vindictive” and “retaliatory.”
Background on Recent Changes
Home insurance costs in California are already expected to rise following recent adjustments Lara made to encourage insurers to continue writing policies, especially in wildfire-prone areas. The latest proposal, announced last week, focuses on streamlining the process for reviewing rate increases. Lara has said the changes are intended to make the system more efficient.
Details of the Proposal
The commissioner’s proposed rule changes would:
- Impose new timelines and guidelines for intervenors and administrative law judges.
- Tighten the definition of what qualifies as a “substantial contribution” for intervenors to receive compensation.
- Limit administrative law judges’ authority in rate reviews.
Consumer Advocacy Response
Consumer Watchdog, a nonprofit that authored Proposition 103 — the state law governing insurance rate regulation — strongly opposes the plan. The organization has frequently criticized Lara and questioned his ties to the insurance industry. Jamie Court, the group’s president, called the proposal “Trumpian” and suggested it was meant as retaliation against the group’s past actions, including lawsuits against the Department of Insurance.
Consumer Watchdog argues that the proposed changes would reduce compensation available for intervenors, who rely on those funds to hire experts to evaluate rate requests. The group said this could discourage participation and lead to faster approval of rate hikes. Since 2002, Consumer Watchdog claims to have saved Californians more than $6 billion in home and auto insurance premiums while receiving $14.2 million in compensation — about 25 cents for every $100 saved.
Industry Support
The American Property Casualty Insurance Association has expressed support for Lara’s proposal. In a statement, Denni Ritter, the association’s vice president for state government relations, described California’s intervenor process as “broken” and said it has contributed to delays in rate approvals and higher costs for consumers.
Broader Context
Consumer advocates remain divided. Robert Herrell, executive director of the Consumer Federation of California and a former deputy insurance commissioner, said he does not always agree with Consumer Watchdog but acknowledged its role in limiting premium increases. He warned that stricter requirements for intervenors could discourage oversight and result in higher costs for policyholders.
The Department of Insurance, however, maintains that the proposal is designed to increase transparency and expand participation. Michael Soller, a spokesperson for the department, said insurers have complained that lengthy approval processes affect the availability of coverage, particularly in high-risk areas. The public comment period on the proposal begins Oct. 3, with a hearing scheduled for Nov. 20.
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