Sacramento, CA — As public opposition mounts to the still-secret, back-room insurance bailout deal in Sacramento, Consumer Watchdog urged vigilance until the Monday, September 11, deadline for new legislation to be put in print passes.
“Until lawmakers and Insurance Commissioner Ricardo Lara say they are not going to pursue the insurance industry’s billion-dollar bailout plan, California consumers must remain alert for an 11th hour smash and grab,” Consumer Watchdog said.
Lara’s central place in the secret bailout deal has become clear over the last days. A memo written by insurance lobbyist John Norwood, circulated Wednesday evening, asked legislators to back “the plan” endorsed by Insurance Commissioner Ricardo Lara.
Commissioner Lara’s public calendar entries from May to July, which only just appeared on the CDI website yesterday, reveals a flurry of meetings with industry executives as well as state officials. Not a single consumer advocate or consumer advocacy group met with Lara in those months; written requests from Consumer Watchdog have been ignored. Public interest groups have been locked out of the entire process.
In the last 24 hours, broad based opposition to any last-minute bailout or deregulation scheme has grown.
The San Diego Union Tribune weighed in: “September is a scary time in the Capitol. As the Legislature hurries to finish its work before adjournment, state lawmakers have a history of making decisions on complex issues that come back to haunt Californians. Newsom and the legislature must not rush through huge changes to property insurance.”
Bay Area Congressman John Garamendi, who as the first elected Insurance Commissioner implemented Proposition 103’s requirements, said, “The insurance industry seems to be writing the playbook. If they succeed, [it’s] guaranteed California policyholders will once again be screwed by the insurance industry.”
Consumer advocate Ralph Nader urged state legislators yesterday “Deregulation of Prop 103’s protections by California officials will lead to immediate and enormous increases in what people will pay for insurance in California.”
Consumers Excluded from Secret Talks With Industry, Lara, Lawmakers
The insurance industry’s scheme centered on keeping the public in the dark until it was too late to stop it.
The outline of the industry’s proposal was published only a few weeks ago and its impact on consumers analyzed by Consumer Watchdog. The insurance industry’s game plan to “jam” the deal through during the final days of the legislative session was confirmed by a former industry lobbyist boasting to passengers and flight crew on a Southwest flight to Sacramento recorded by Consumer Watchdog President Jamie Court.
Background on the Insurance Industry Crisis in California
Scapegoating climate change and the threat of wildfire, an increasing number of insurance companies have refused to sell or renew home insurance in California over the preceding months, threatening that unless lawmakers and Insurance Commissioner Ricardo Lara derail Proposition 103’s reforms and make state homeowners bailout insurers for losses in the FAIR Plan, they will continue to disrupt the insurance marketplace. Insurance companies are also restricting access to auto insurance. Consumer Watchdog has asked California Attorney General Rob Bonta to investigate insurance company collusion, which is a violation of Proposition 103 and the antitrust laws.
Read Consumer Watchdog’s May 2023 analysis of the insurance industry’s misinformation campaign.
Proposition 103 requires auto, home and business insurance companies to open their books to public scrutiny and prove they need rate increases before they can take effect. It requires that auto premiums be based on driving safety record rather than zip code, and mandates a 20% discount for good drivers; applies the state’s antitrust, civil rights and consumer protection laws to the industry; gives consumers the right to challenge violations of the law by insurance companies or the insurance commissioner in court; and made the insurance commissioner an elected position. Over $1.2 billion in refunds were issued by insurance companies after the passage of Proposition 103; Californians have saved $154 billion on auto insurance alone since voters enacted Proposition 103 in 1988, according to a 2019 analysis by Consumer Federation of America. The insurance industry spent over $63 million in its unsuccessful campaign against the grassroots backed initiative.
Read more about Proposition 103 here.