Representatives John Garamendi, Zoe Lofgren and other members of the California congressional delegation have sent a letter to California Insurance Commissioner Ricardo Lara urging him to use his authority under state law to stabilise the insurance market and protect consumers.
The letter responds to recent announcements by Lara, including his proposed Sustainable Insurance Strategy, which the signatories say could reduce the Insurance Commissioner’s regulatory authority, as well as other proposals that could threaten the consumer protections established by Proposition 103.
Garamendi served as the state’s insurance commissioner from 1991 to 1995 and again from 2003 to 2007 before being elected Lieutenant Governor of California.
“We are writing regarding your recently announced Sustainable Insurance Strategy,” the letter states. “In short, California’s current insurance market is in chaos. Across the state, major insurance companies are cancelling policies, denying coverage, and dramatically raising insurance rates for homeowners and other consumers.”
The letter asserts that under Prop. 103, the state’s insurance commissioner has the power to stabilise the statewide insurance market, and it urges Lara to use that power to immediately review proposed rate increases “under each new risk model to determine whether they are necessary, reasonable, and not excessive for consumers. We also believe that it would be beneficial to use this power to require the insurance industry to provide adequate, affordable coverage in every part of the state”.
It argues that Lara’s proposed Sustainable Insurance Strategy seems to suggest dramatic changes to the commissioner’s regulatory powers “that could result in a diminution of the authority granted by California voters and your ability to create a stable insurance market in our state”.
Proposals such as using proprietary predictive models, expediting rate reviews that limit public comment, allowing insurers to leave certain regions of the state, and incorporating reinsurance costs into California rates could threaten consumer protections established in Prop 103, the letter continues.
