By Stephen Hobbs, THE SACRAMENTO BEE
https://www.sacbee.com/news/politics-government/capitol-alert/article304362711.html
Consumer Watchdog, the advocacy organization that has long gone toe-to-toe with the Department of Insurance, is again facing off with the state agency in a new lawsuit.
This week it sued Insurance Commissioner Ricardo Lara, and his department, over a decision to allow companies to charge their policyholders to help prop up the California FAIR Plan, the state-created private insurance provider of last resort.
Lara earlier this year said the FAIR Plan could seek $1 billion from its members, the companies that sell property insurance in the state, in response to the Los Angeles-area wildfires. Half of that money could ultimately be covered by policyholders.
“If this change is allowed to stand, it will force California policyholders to pay hundreds of millions — and potentially billions — of dollars in unlawful surcharges,” Consumer Watchdog argues in the lawsuit. It calls on a judge to not allow insurance companies to be able to directly pass on costs related to helping out the FAIR Plan’s finances.
Gabriel Sanchez, a department spokesperson, said in a statement that the suit “undermines our efforts to enhance competitiveness across the market, which would allow people to transition from the costly and limited FAIR Plan back to the standard insurance market.”
The number of people who have turned to the FAIR Plan in recent years has grown rapidly as insurance companies have paused and cut back business in the state. That is putting a greater strain on the plan and was raising concerns about its finances before the destructive Southern California blazes.
Denni Ritter, a lobbyist for the American Property Casualty Insurance Association, a national trade group, warned in a statement that not allowing companies to recover money from policyholders for aiding the FAIR Plan would “push our fragile insurance market closer to total collapse.”
A FAIR Plan spokesperson declined to comment on the lawsuit.