By CAMILLE VON KAENEL, POLITICO
With help from Blanca Begert and Wes Venteicher
GOING FOR THE JUGULAR: As fire season gets underway, insurers are declaring open season on their No. 1 nemesis.
A half-dozen trade groups this month took the unprecedented step of contesting Consumer Watchdog’s right to participate in proceedings at the Insurance Department — the firebrand ratepayer advocacy group’s main source of funding.
It’s the first time insurers have tried to get the group disqualified from proceedings at the department, and it comes as Insurance Commissioner Ricardo Lara is hearing requests for record rate increases stemming from wildfire losses.
The squabble shows the hold that a single group and its charismatic leader, Jamie Court, has over the debate over how to fix the state’s wildfire insurance problems — and the correspondingly growing frustration of an industry already on its heels.
Relations have been tense between the insurance industry and Consumer Watchdog since the group wrote and helped pass Proposition 103. The 1988 voter-approved measure required cuts in insurance rates and set up the intervenor system that the group is now the most frequent participant in, receiving 96 percent of the department’s payments to intervenors last year (which it bills to insurers).
Property insurers fleeing the rising costs of climate change have grown increasingly frustrated with Consumer Watchdog because of the group’s opposition to Lara’s proposed reforms to entice companies back to California, including faster rate hikes and the use of proprietary forward-looking climate models. The group helped tank an insurance deal between the Legislature, Lara and the industry last year by arguing it would cost customers.
Personal Insurance Federation of California President Rex Frazier, in his letter to the Insurance Department, blamed the state’s wildfire insurance crisis partly on Consumer Watchdog’s advocacy, which has contributed to keeping insurance rates in California among the lowest in the nation.
Other groups, including the National Association of Mutual Insurance Companies, the Western Insurance Agents, the American Property Casualty Insurance Association and the California Building Industry Association, echoed his arguments.
“I hope that we start to have expectations placed on them to be responsible participants in the system, rather than just bomb throwers who ignore the downsides of their bad behavior,” Frazier said in an interview.
Court, for his part, is blaming Lara for issuing a public notice alerting the industry of the option to challenge CW’s status.
“He’s willing to turn the helm of the insurance commissioner’s office over to the companies to muddy us up,” Court said in an interview. “That tells me everything about the fact that we need to be involved in these proceedings, because otherwise, the companies are gonna get rubber stamps on their rates.”
Lara spokesperson Michael Soller acknowledged the public notice was a new strategy but cast the effort as an all-sides push for more transparency and part of a “long-overdue and necessary” change.
“This is the Department holding all parties to the rate filing process accountable, including intervenors,” Soller said in an email. “We don’t want the intervenor process to continue to be a black box.”
Lara is planning to decide on the group’s status by Aug. 2, unless he decides a hearing is needed, according to a notice last week.
But there might be fireworks sooner: The Insurance Department is taking public feedback tomorrow afternoon on its plan to require insurers to boost their policy offerings in certain fire-prone areas. And the Assembly Insurance Committee tomorrow will weigh two Senate proposals to require underwriters to account for mitigation and to allow the state to give the insurer of last resort a loan in case of a big loss. — CvK