By Camille Von Kaenel, POLITICO
SACRAMENTO, California — Insurance Commissioner Ricardo Lara is planning to settle a fight that could reshape how his agency reviews insurance rate hikes and that has pitted an agency judge and Consumer Watchdog against the insurance industry.
What happened: Lara issued a ten-day stay late Friday on a ruling by the chief administrative law judge for the Insurance Department, Kristin Rosi, last month that determined some rate hikes approved by department staff needed an additional layer of approval by an administrative law judge before they could go into effect.
While Lara has the power to intervene in agency proceedings, he rarely does so to such a granular layer. The move plays into a sharpening fight over how much to allow insurers raise rates to entice them to stay in California.
“Given the ongoing reforms we are making to enhance transparency and public participation in the rate review process, Commissioner Lara is going to take the necessary time to look at this further,” agency spokesperson Michael Soller said in an email.
Why this matters: As property insurers pull back from the state amid record-setting wildfire losses, Lara is facing an onslaught of pressure from insurers, consumer advocates and elected officials. At least one company, Allstate, has promised to increase its California business if Lara’s proposed reforms go through, including rules speeding up rate reviews (opens in new tab) and letting companies raise rates (opens in new tab) if they offer a minimum quota of policies. But consumers have so far seen only a steady drumbeat of rate hikes and nonrenewals.
Lara’s faced accusations (opens in new tab) of being too friendly with the insurance industry since the start of his term, including a call this week (opens in new tab) by Rep. John Garamendi, a former insurance commissioner, for him to step aside.
Background: Rosi made her ruling last month in a case granting $175,895 in compensation to Consumer Watchdog for intervening in State Farm’s 2023 rate case, in which the company ultimately got approval for a 28 percent rate hike (opens in new tab). Administrative law judges already periodically review decisions granting compensation to public intervenors, and Rosi determined that layer of approval should apply to the rate case, too.
The insurance industry, including major trade groups and individual companies Allstate and State Farm, has since urged Lara to reject the ruling, arguing it would add delays to an already long regulatory review that has made business in California difficult.
“Certainly, there is no legal requirement, or legitimate purpose, for adding such a burdensome step to the process,” the Personal Insurance Federation of California, the Pacific Association of Domestic Insurers, the American Property Casualty Insurance Association, and the National Association of Mutual Insurance Companies wrote in a letter (opens in new tab) Wednesday.
Consumer Watchdog has urged Lara to uphold the ruling in its own letter, (opens in new tab)arguing that it would not delay rate reviews.
“As much as the insurance industry may dislike it, review by experienced and independent judges is considered a cornerstone of American justice, and its application here will protect Californians against arbitrary and improper rates, as the voters intended,” Harvey Rosenfield, the founder of the consumer advocacy group, wrote Nov. 5.
What happens next: The stay expires Nov. 25, and Lara plans to make a final decision by then, Soller said.
