Why Lara should link auto insurance rate hikes to prompt refunds of pandemic overcharges [The San Diego Union-Tribune]

San Diego Union-Tribune (CA)

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The gap between the populist, pro-consumer rhetoric of Ricardo Lara as a Democratic candidate for California insurance commissioner in 2018 and his performance on the job has been considerable and consistent. In 2019, it was revealed that despite promises not to do so, he'd taken in at least $270,000 in contributions from 56 people and companies with insurance industry ties. That summer, he assured industry leaders that he would be "receptive" to their input going forward. Subsequently, he sided with his donors and overruled decisions made by administrative law judges that they didn't like.

Before and after Lara won re-election in 2022 against an unqualified Republican challenger, his modus operandi has remained unchanged. In recent months, Lara has approved auto insurance rate hikes of 6.9 percent for Geico, Mercury and Allstate, with similar increases now pending for several other insurers with many customers in California. Why 6.9 percent? Because a larger request often triggers a public hearing of the sort that insurers — and maybe Lara — want to avoid. This is troubling enough. But a report Tuesday in the Los Angeles Times detailed how the rate hikes were approved or in the works even though Californians are still owed refunds for overpayments during the initial stages of the pandemic in 2020, when stay-at-home orders led traffic to dwindle. Consumer Watchdog estimates policyholders have been paid about $2 billion but are still due a staggering $3.5 billion more.

Insurance agency officials told the Times that rate hikes and refunds are separate issues. But should they be? Why wouldn't an insurance commissioner use rate hikes as leverage to spur insurers to more quickly process overpayments that date back years? Lara's handling of this seems like more evidence he is a captive of the industry he vowed to vigorously regulate. If he's not, he should prove it.

This story originally appeared in San Diego Union-Tribune.