Thirty-two members of California’s Democratic Congressional delegation wrote a letter to Insurance Commissioner Ricardo Lara this week expressing concern that a plan he announced in September would reduce the commissioner’s regulatory authority and threaten consumer protections established in Proposition 103, the state’s insurance reform law.
The letter to Commissioner Lara, led by Representatives John Garamendi and Zoe Lofgren, stated:
“Your recent announcements, including the proposed Sustainable Insurance Strategy, appear to suggest dramatic changes to the Commissioner’s regulatory authority 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 including reinsurance costs in California rates could threaten the important consumer protections established in Proposition 103 and in place since 1988. We believe it is important that you keep the interests of California consumers at the forefront of your decision-making process.
“We bring our concerns to your attention in anticipation of a full and transparent process of rulemaking, public hearings and public comment on any proposed changes to the Commissioner’s regulatory authority and process for approving rate increases for policyholders. Such a public process is necessary to protect consumers from unchecked corporate interests, and we strongly believe that any hasty action should be subject to public scrutiny.
Prop 103 made the office of Insurance Commissioner an elected position, and Representative Garamendi was the first elected Commissioner in California.
Today marks the 35th anniversary of voter approval of Proposition 103, overcoming a record $63 million insurance industry campaign against it. Prop 103 established the strongest insurance consumer protections in the nation, according to the Consumer Federation of America, and has saved California homeowners, drivers and business owners hundreds of billions of dollars on their insurance. Consumer Watchdog’s challenges to excessive rate increases using Prop 103’s public participation process have saved consumers $4.6 billion since 2002.
Consumer Watchdog warned last week that Insurance Commissioner Ricardo Lara’s deregulation deal with the insurance industry will not expand access to affordable insurance for California homeowners or small businesses.
Documents uncovered by Consumer Watchdog through a public records request show that the quid pro quo for allowing insurance companies to loot California – the industry’s “commitment” to resume selling insurance – is riddled with loopholes.
The documents containing the Commissioner’s plan show:
Insurers would be allowed to meet the only consumer benefit of the deal – their “commitment” to expand homeowners’ coverage in wildfire areas to 85% of their market share outside high-risk areas – by offering the same high-cost, low-benefit coverage that homeowners already have guaranteed access to today under the FAIR plan.
The Commissioner could waive the “85% obligation” altogether for any insurer that claims it cannot meet it.
The bill’s other provisions to facilitate unjustified rate increases mean that consumers will not be able to afford the policies insurers are willing to sell.
