By Abigail Adriatico, INSURANCE BUSINESS
Six consumer organizations have issued a warning to California state senate and assembly leaders regarding the possible effect of a proposed budget trailer bill.
A letter was signed by consumer organizations Consumer Watchdog, Consumer Federation of California, Consumers for Auto Reliability and Safety, Consumer Federation of America, Consumer Protection Policy Center, and The Children’s Advocacy Institute.
In it, the groups stated that the proposal may cut the consumer intervention process and sacrifice the transparency that comes with public scrutiny of increases in insurance rates for the sake of easily approving them.
“Consumer interventions by Consumer Watchdog over the last 22 years have produced $6 billion in savings, and Consumer Federation of California Education Foundation’s interventions over the past 10 years have resulted in over $400 million in savings for California policyholders. These savings are in jeopardy under this proposal,” the groups’ letter said.
According to Consumer Watchdog, the trailer bill would exclude the opinions of consumers in rate increases that were below 7%, force the insurance commissioner to decide on rates with limited information, remove the public’s participation before the approval of a rate increase due to faster hikes in rates, change rules even if public challengers bear the right to a public hearing, and encourage insurers to apply for three 7% increases in rates in a year in order to avoid public hearings.
“Giving insurers the right to raise rates more quickly will only leave Californians paying higher rates, not get more insurance companies back in the market,” the groups said in their letter.
“The largest insurance companies in California have received double digit rate hikes recently – 20% for State Farm that took effect in March on top of an additional 6.9% last year, three rate hikes adding up to 37% for Farmers in the last year – and the companies still refuse to write new business,” they said.
They called on lawmakers to make sure that insurers are required to cover people who met state home hardening and brush clearance guidelines as they feared greater liability under the FAIR plan.