Watchdog Group Opposes Bill That Would Hike Insurance Rates In Fire-Prone Areas

Published on


June 5, 2020

A bill that would allow California insurance companies to boost homeowners’ insurance rates in regions prone to wildfires will price people out of the market, a watchdog group says.

Consumer Watchdog contends AB 2167, authored by Assemblyman Tom Daly, D-Anaheim, would override Proposition 103’s protections against excessive and unnecessary rate increases, leaving many residents unable to pay for the insurance, despite “unenforceable” assurances by the companies that they will renew policies in those areas.

Harvey Rosenfield, who authored Prop. 103, said AB 2167 “rocketed” out of the Assembly Appropriation’s Committee on Wednesday and is being fast-tracked for the Assembly floor next week amid the pandemic, the collapse of the economy and widespread protests against police brutality.

“After years of trying — only to get called out by the news media — this time the insurance industry might well succeed in getting deregulation through the Legislature if the politicians think no one is watching,” he said.

In a letter sent to Lorena Gonzalez, D-San Diego, chairwomen of the Assembly Appropriations Committee, Los Angeles-based Consumer Watchdog said AB 2167 is “an impermissible attack on Proposition 103 cloaked in proclamations about climate change and wildfires.”

Enacted by California voters in 1988, Prop. 103 was designed to protect consumers from price gouging. It requires that insurance companies get prior approval from the California Department of Insurance before boosting property and casualty rates.

“The insurance industry has provided no evidence that the regulatory structure created by the voters is not working, or any justification for replacing it with the costly multi-tiered, new bureaucracy created by AB 2167 and its companion bill, SB 292,” Consumer Watchdog’s letter states.

Senate Bill 292, authored by state Sen. Susan Rubio, D-Baldwin Park, establishes formulas to determine which counties are eligible for an “insurance market action plan,” which would allow insurers to cut through some of the red tape involved in hiking rates.

Daly’s vision

Daly said many insurers have re-evaluated their exposure to fire risk, and therefore, reduced the number of policies they provide in high-risk areas. That has resulted in a painful process for many homeowners, he said, who have had to seek coverage through other insurers, often paying more.

“Too many homeowners in California are suffering the consequences of insufficient competition in the insurance market,” Daly said in a statement. “This bill will bring more insurers back to the market and give consumers more options to choose from.”

Daly said it will help stop the cycle of non-renewals and ease the minds of homeowners who are afraid to open the mail.

‘When they can least afford it’

AB 2167, Consumer Watchdog’s letter states, would allow insurance companies to raise homeowners’ insurance rates at a time when they can least afford it.

Ordinarily, the bill would be headed to a second policy committee in the Assembly since it’s an amendment to Prop. 103, Rosenfield said, but the process of double-referring bills has stopped amid the COVID-19 pandemic.

If the legislation clears the Assembly floor it will go next to the Senate Insurance Committee.

“The voters passed Prop. 103 because the state Legislature was beholden to the insurance industry,” Rosenfield said. “Thirty years later the insurance industry is trying to buy its way out of what voters mandated.”


Kevin Smith handles business news and editing for the Southern California News Group, which includes 11 newspapers, websites and social media channels. He covers everything from employment, technology and housing to retail, corporate mergers and business-based apps. Kevin often writes stories that highlight the local impact of trends occurring nationwide. And the focus is always to shed light on why those issues matter to readers in Southern California.

[email protected]

Follow Kevin Smith @sgvnbiz

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