By Levi Sumagaysay, CALMATTERS
Insurance companies and California Insurance Commissioner Ricardo Lara have blamed the state’s insurance woes on what they call outdated regulations.
But Proposition 103 — which was passed by voters in 1988 and includes a provision that the state’s insurance department has final say over rate increases — has helped customers save billions of dollars in premiums, the department says on its website. Consumer Watchdog, the nonprofit advocacy group whose founder wrote Prop. 103, on Thursday released a 42-page report that calculates the savings at more than $5 billion in auto and home insurance premiums in the past 21 years.
Over that same period, the group has received $11.6 million in fees. It said it spent that money — paid by insurers as required by law — on attorneys and advocates, plus outside experts such as geologists and economists.
“You’ve been hearing a lot of the attacks on the process from the industry, some of which are getting repeated by lawmakers or the commissioner,” said Carmen Balber, Consumer Watchdog executive director, in an email to CalMatters. The report “debunks a lot of that misinformation.”
Consumer Watchdog has repeatedly used the intervenor process under Prop. 103, which allows the public and advocacy groups to challenge rate increases and recoup their costs for doing so. The group provides its analysis of publicly available data to show that when it did not intervene, insurers “got most of the rate increase they requested.”
The Insurance Department is taking issue with Consumer Watchdog’s report. Spokesperson Michael Soller said in an email that the group is “overstating” its numbers “with no accounting for what the Department’s role was in that negotiation.”
As many major insurers have stopped writing home or fire insurance in the state, driving many homeowners to the last-resort FAIR Plan, Lara and insurers have accused Consumer Watchdog of slowing down rate reviews and profiting from Prop. 103.
But the group — which has accused Lara of being too cozy with insurance companies as he proposes new regulations to try to get insurers to resume writing policies in the state — said in its report that “it takes significant expertise and resources to counter the industry’s army.”
The group also accused Lara of approving some rate increases without adequate review.
• Soller: “To be attacked for making a decades-old process more fair, equitable and transparent speaks volumes about the attacker. We are focused on solutions, not petty games.”
