Consumer Watchdog Warns Governor, Legislative Leaders that Insurance Commissioner Lara's Deregulation Deal with Insurers Has No Consumer Benefits

Industry and Insurance Commissioner Respond with Attack on Consumer Watchdog

LOS ANGELES, Nov. 2, 2023 /PRNewswire/ -- Consumer Watchdog has written Governor Gavin Newsom, Senate pro tem Toni Atkins and Speaker Robert Rivas to warn that the deregulation deal cut by Insurance Commissioner Ricardo Lara 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 reveal that the quid pro quo for allowing insurance companies to plunder California – the insurance industry's "commitment" to resume the sale of insurance – is riddled with loopholes.

Commissioner Lara refused to respond to the revelation and instead attacked Consumer Watchdog for saving consumers money. Politico reported last night that the insurance industry is parroting the same talking points in a new website and ads defending deregulation with a similar attack on Consumer Watchdog.

"When the insurance industry and the Insurance Commissioner start syncing their talking points consumers should check their wallets," said Carmen Balber, executive director of Consumer Watchdog. 

"We now know that the deal cut by Insurance Commissioner Ricardo Lara with the insurance industry will not restore affordable insurance to a single California home or business owner. In exchange for deregulating insurance in California, consumers would get no more than the bare bones coverage they are guaranteed today," wrote Balber and Harvey Rosenfield, author of Proposition 103 and founder of Consumer Watchdog, to the Governor and legislative leaders.

Read the letter.

The documents containing the Commissioner's plan show: 

• Insurers would be allowed to meet the deal's only consumer benefit - their "commitment" to expand home insurance coverage in wildfire areas to 85% of their market share outside risky areas - by offering the same high cost, limited benefit coverage that homeowners are already guaranteed access to in the FAIR Plan today. 
• The commissioner could waive the "85% commitment" entirely for any insurer that claims it cannot meet it. 
• The bill's other provisions to facilitate unjustified rate hikes mean consumers will be unable to afford the policies insurers are willing to sell.

View the documents.

Consumer Watchdog's records request also uncovered details about how Lara plans to gut the consumer protections of Prop 103 that have saved Californians hundreds of billions of dollars, including the right of groups like Consumer Watchdog to independently scrutinize and challenge rate increases that are unjustified. 

After the documents' release last week, the Insurance Commissioner refused to respond to media questions about his plan, which was rejected by the legislature, or how it compares to the deal he announced making with the insurance industry last month.  Instead, the Commissioner's deputy criticized Consumer Watchdog for using the public participation process in Prop 103 that has allowed the organization to challenge unjustified rate hikes and save drivers, homeowners, small businesses, and doctors $4.6 billion since 2002. Consumer Watchdog's expenses to pay for the lawyers, actuaries, scientists and other experts to go up against the insurance industry's experts have been 25 cents for every $100 saved policyholders in lower premiums.

Learn more about the savings.

Politico reported that the insurance lobbying group, American Property Casualty Insurance Association (APCIA), behind the attack on Consumer Watchdog had simultaneously launched a campaign to promote its deregulation plan with Insurance Commissioner Lara. APCIA represents national insurance companies including State Farm and Allstate who have destabilized California's home insurance market by announcing pullbacks.  

The last insurance commissioner to attack Prop 103's public participation process as Commissioner Lara has was Chuck Quackenbush. Read news reports of Quackenbush's attack.

"By attacking Consumer Watchdog for making sure the industry and the elected insurance commissioners obey Proposition 103, Ricardo Lara is following in the disgraced footsteps of Chuck Quackenbush, who was the darling of the insurance industry when he was elected in 1994. He ended up resigning his office and fleeing the state when he was caught in a pay-to-play scandal involving insurance companies."

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SOURCE Consumer Watchdog