By CAMILLE VON KAENEL, POLITICO
https://subscriber.politicopro.com/article/2025/07/consumer-groups-sue-california-to-recoup-compensation-for-fire-insurance-work-00485785?site=pro&prod=alert&prodname=alertmail&linktype=headline&source=email
Two consumer advocacy groups sued California Insurance Commissioner Ricardo Lara on Tuesday for denying them compensation for their involvement in crafting new insurance rules aimed at keeping property insurers in the state.
What happened: The Department of Insurance denied three compensation requests totaling $324,760 from Consumer Watchdog and the Consumer Federation of California Education Foundation in May and June. The agency argued the groups did not make “substantial contributions” under the state’s formal intervenor process, which allows outside groups to receive industry-funded compensation for participating in regulatory proceedings.
The advocacy groups allege in their lawsuit that Lara’s denials amounted to a “prejudicial abuse of discretion.” They asked the Los Angeles Superior Court to overturn the denials.
Why this matters: The clash escalates a long-running rift between the watchdog groups and Lara as California grapples with an exodus of home insurers amid worsening wildfire risk and record-breaking losses. Consumer Watchdog has sharply criticized Lara’s 2024 regulatory reforms as industry-friendly, including rules allowing insurers to incorporate future climate risks into rates and requiring more complete rate filings.
More details: In the denials, Lara and his special counsel Lucy Wang argued that the groups mischaracterized the reforms in their opposition and didn’t materially influence the final rules.
At issue is $313,403 that Consumer Watchdog sought for its work on both rules, and $11,357 the Consumer Federation sought for its work on the second rule. For comparison, Consumer Watchdog has already received $1,235,480 in compensation in 2025 for its interventions in rate filings.
Big picture: The spat is part of a bigger fight over the role of the intervenor process itself, which voters approved in 1988 via Proposition 103 to fund public participation in rulemakings and rate cases. Property insurers have partly blamed the bureaucratic layers of Prop 103 for their decisions to reduce business in the state and have cast Consumer Watchdog as using the process for financial gain.
Lara, meanwhile, has not only sharpened his rhetoric against Consumer Watchdog in recent months but also directly sparred with the administrative law judges overseeing the compensation process, ultimately removing them and reassigning the job to himself and Wang.
Consumer Watchdog’s attorneys argue the process is biased.
“Proposition 103 guarantees consumers the right to participate in insurance proceedings and be compensated for their contributions,” Pamela Pressley, senior counsel at Consumer Watchdog, said in a statement. “Commissioner Lara has turned that promise on its head — punishing consumer groups for opposing his policies by abusing the compensation process. That’s unlawful, and it’s dangerous for the integrity of insurance regulation.”
Insurance Department spokesperson Gabriel Sanchez said the agency was reviewing the lawsuit.
What else to keep in mind: The fight over the intervenor process is playing out at the same time as the regulatory agency and the industry work towards new rates that incorporate the reforms and deal with the aftermath of the Los Angeles fires. The record losses from January’s fires triggered an industry-wide assessment by the state’s insurer of last-resort as well as an emergency rate hike by the state’s largest insurer, State Farm.
Consumer Watchdog has been heavily involved throughout, including by intervening in the new rate filings, formally opposing the State Farm hike and suing over the assessment. It’s had little success so far. But the new rate filings by property insurers that incorporate the new rules have yet to gain final approval.