Consumers Need SB 1738 – The Insurance Policyholder and Patient Association Act

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Insurance Policyholders and Patients Lack A Voice in Insurance and Healthcare Ratemaking and Policy Proceedings

Insurance companies spend millions to advocate for higher rates and weaker consumer protections by hiring accountants, lawyers, auditors and other experts that critically outnumber and drown out the voices of consumer advocates at key regulatory and policymaking proceedings.

In 1999, for example, the California Department of Insurance addressed 175 rate filings for personal auto insurance plans and 219 requests for changes to classification plans that determine who pays how much for auto insurance. Additionally, insurers made 59 rate change filings for personal homeowners insurance. These rate change filings directly impact the pocketbooks of millions of Californians whose interests should be well-represented.

Most insurance policyholders and patients, however, simply do not have the financial resources nor the technical expertise to match the industry when it comes to advancing their interests effectively before the Department of Insurance and other regulatory agencies, the legislature and the courts. Consumers need a mechanism through which they can pool their resources, energy and voices to create that ability collectively.

The Department of Insurance Has a Poor Record of Helping Consumers

The Department of Insurance has either not had the authority, the resources or the political resolve to aggressively advocate on behalf of consumers’ interests related to lower rates and improved quality of insurance services. For example:

  • The California Department of Insurance received over 1,504,000 calls from consumers between 1995-1998 and yet during this same period only took 43 actions against insurers resulting in fines.
  • If Insurance Commissioner Quackenbush had enforced Proposition 103‘s limits on excessive profits during 1995 and 1996, his first two years in office, the average premium in California would have been $100 lower each year than it actually was, and 1997 profit data show that premiums in the state could have been lowered by 28% and still deliver insurers a fair profit. As a result, between 1995 and 1997, California motorists paid $5.2 billion more for auto insurance than they should have.

    The Insurance Policyholder and Patient Association Will Effectively Advocate Consumer Interests and Hold Government Oversight Agencies Accountable

    The most effective way to make the insurance industry and government oversight agencies more accountable to consumers is for the California Legislature to pass legislation, SB 1738, that will establish an Insurance Policyholder and Patient Association (IPPA). IPPA will be a non-profit, public benefit corporation based on the Nader-conceived Citizens Utility Board (CUB) model. Membership will be open to all California citizens who will democratically elect a board of directors. IPPA will assist in establishing adequate and affordable insurance coverage for all California policyholders by providing the following services:

  • Conducting research and providing information to the public concerning the quality and cost of insurance services provided by insurers
  • Advising state agencies in their promulgation of any standards and regulations related to insurance
  • Advocating legislation or other proposals to protect and promote the interests of insurance policyholders and patients
  • Representing and promoting the interests of insurance policyholders and patients before administrative and judicial bodies by initiating, intervening or participating in proceedings related to insurance.

    To carry out its duties, IPPA’s volunteer board will hire a staff of advocates, attorneys, and policy experts that will effectively watchdog the insurance industry and the Department of Insurance. IPPA would be fully self-supporting by its own membership contributions. Through a simple form and business reply envelope added to DMV and insurer mailings, policyholders will be informed of the existence, function, and goals of the Insurance Policyholder and Patient Association–a voice for real insurance reform.

  • Consumer Watchdog
    Consumer Watchdog
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