Consumer Group Asks California Lawmakers to Slow Insurance Bill Debate

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By Timothy Darragh, BESTWIRE

August 13, 2020


A consumer group is asking California lawmakers to put the brakes on passage of a bill it says undercuts the state’s landmark legislation guarding against price gouging and discrimination.

On Consumer Watchdog‘s website, founder Harvey Rosenfield said lawmakers need to get a more balanced assessment of A.B. 2167, which would create an insurance market action plan for communities where homeowners’ coverage has become difficult or impossible to get due to fires.

“It would override the voter-approved Proposition 103’s protections against price gouging and community discrimination, in violation of the limits the voters imposed on the Legislature’s power to amend the initiative,” said Rosenfield, who wrote Proposition 103 more than 30 years ago.

Insurers say the bill would commit them to offer new and renewal policies in targeted areas identified in the plan, establish individual home and community mitigation and verification requirements for eligible homes, and include a plan to maintain the insurer’s solvency and avoid over concentration of risk exposure, according to a bill analysis.

The goal is to give consumers options they might not have now, as insurers have fled fire-prone markets. Backers say by allowing an expedited process to provide coverage in areas more likely to burn albeit, with more costly rates private insurers still would be offering consumers choices and a better deal than the limited and expensive coverage provided through the FAIR Plan (Best’s News, Aug. 5, 2020).

The American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies support A.B. 2167, saying it strikes a balance that provides homeowners in wildfire zones access to more choice and competition among insurers based on price and coverage (Best’s News, June 9, 2020).

Rosenfield said the bill would immediately raise rates in some areas by 40%, citing finds by Robert Hunter, director of Insurance for Consumer Federation of America. Hunter said the bill would allow insurers to pass through the costs of reinsurance, leading to the price spike.

Rosenfield also spoke out about the process, which he said was rushed and slanted against consumers.

“Ordinarily, bills like AB 2167 that raise such constitutional issues are sent to the Senate Judiciary Committee after review by the Insurance Committee,” Rosenfield wrote. “But we were advised that the ‘pandemic procedures’ adopted by the Senate would not permit the Judiciary Committee to review the bill.”

Further, Rosenfield said when he was called to address the bill before the senate Insurance Committee, he was given only 20 seconds to make his case, not the four minutes he had been allotted, he said.

A rebuttal was important, he said, because the committee’s 22-page analysis “shamelessly” advocates for the legislation, is “one-sided and error-ridden, it gives short shrift to the arguments in opposition.”

The bill would likely not take effect for years as “the inevitable legal challenge” works its way through the courts, Rosenfield said. “So why the rush this year?” he said.

Rosenfield called on Senate President Toni Atkins to put further deliberations on hold, according to local news accounts.

An attempt to obtain comment from Atkins’ office was not immediately returned.

The bill passed the Senate Insurance Committee earlier this month, but a scheduled Aug. 10 hearing in the Appropriations Committee was postponed.

(By Timothy Darragh, associate editor, BestWeek: [email protected])

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