35 Years Ago Today Voters Approved Insurance Reform Proposition 103
Washington, DC – Thirty-two members of California’s Democratic Congressional Delegation wrote a letter to Insurance Commissioner Ricardo Lara this week expressing concern that a plan he announced in September would diminish the Insurance Commissioner’s regulatory power and threaten the consumer protections established in insurance reform Proposition 103.
The letter to Commissioner Lara, led by Representatives John Garamendi and Zoe Lofgren, said:
“Your recent announcements, including the proposed Sustainable Insurance Strategy, seem to suggest dramatic changes to the Commissioner’s regulatory power that may result in a diminution of the authority granted by California voters and your ability to create a stable insurance market in our state. Proposals such as using proprietary forward-predicting models, expediting rate reviews that limit public comment, allowing insurance companies to abandon certain regions of the state, and incorporating reinsurance costs into Californian rates could threaten the important consumer protections established in Proposition 103 and in place since 1988. We believe it is important to keep California consumer interests at the forefront of your decision-making process.
“We bring our concerns to your attention in anticipation of a comprehensive and transparent process of rulemaking, public hearings, and public comment on any proposed changes to the regulatory powers of the Commissioner and process for approving any rate increases for policyholders. Such a public process is necessary for the protection of consumers against unchecked corporate interests, and we strongly believe that any precipitous action should be subject to public scrutiny.”
Prop 103 made the Insurance Commissioner’s office an elected post and Representative Garamendi was the first elected Commissioner in California.
Today is the 35th anniversary of voters’ approval of Proposition 103, overcoming a record $63 million insurance industry campaign against it. Prop 103 implemented the strongest insurance consumer protections in the nation, according to the Consumer Federation of America, and has saved California homeowners, drivers and business owners hundreds of billions of dollars on their insurance. Consumer Watchdog’s challenges to excessive rate increases using Prop 103’s public participation process have saved consumers $4.6 billion since 2002. Read more about the law here or watch this 35th anniversary video.
Consumer Watchdog warned last week that the deregulation deal cut by Insurance Commissioner Ricardo Lara with the insurance industry will not expand access to affordable insurance for California homeowners or small businesses.
Documents uncovered by Consumer Watchdog through a public records request reveal that the quid pro quo for allowing insurance companies to plunder California – the insurance industry’s “commitment” to resume the sale of insurance – is riddled with loopholes.
The documents containing the Commissioner’s plan show:
- Insurers would be allowed to meet the deal’s only consumer benefit – their “commitment” to expand home insurance coverage in wildfire areas to 85% of their market share outside risky areas – by offering the same high cost, limited benefit coverage that homeowners are already guaranteed access to in the FAIR Plan today.
- The commissioner could waive the “85% commitment” entirely for any insurer that claims it cannot meet it.
- The bill’s other provisions to facilitate unjustified rate hikes mean consumers will be unable to afford the policies insurers are willing to sell.
View the documents and read more about what they reveal about the Commissioner’s deregulation deal with the insurance industry.
