Court Rejects Insurance Industry Attempt to Block Consumer Rate Challenges

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Consumer Group, Dep’t of Insurance Win Victory to Protect Prop 103, Save Policyholders Billions

Santa Monica, CA — Amendments to California insurance regulations
implementing voter-approved Proposition 103’s requirement that
insurance companies pay the costs of rate hike challenges brought by
consumers were upheld by the Los Angeles Superior Court today. The
Court ruled against the insurance companies that sued to invalidate the
regulations, which were enacted under former Commissioner Garamendi and
defended by Commissioner Poizner and the Foundation for Taxpayer and
Consumer Rights (FTCR). The rules require insurance companies to comply
with Proposition 103 rules forcing insurance companies to pay the legal
and expert fees of any consumer or group that intervenes to challenge a
proposed rate change if the challenger contributes to the end result,
whether or not a formal hearing occurs. The case was ACIC v. Poizner,
et al.

Click here to view a copy of the Court’s ruling.

"Prop 103 makes insurance companies accountable when they try to
gouge consumers by allowing the public to challenge excessive rates and
requiring the offending company to pay the costs of that challenge,"
said FTCR’s litigation director Pam Pressley, who presented consumer
arguments to the Court in today’s hearing. "The Court upheld the
principle that consumers should be encouraged to participate in the
rate-setting process to force companies to justify their rates. By
upholding the rules, the Court ensured that consumer groups can
continue to fight for and win lower rates by being compensated when
they make a substantial contribution."

In recent years, FTCR has helped save California homeowners,
drivers and doctors more than $800 million by challenging excessive
rates proposed or charged by insurers. In that effort, FTCR brings
legal, actuarial, and (in the case of earthquake insurance rates)
geological experts to the Department of Insurance to make the case
against price gouging. In some instances, companies have withdrawn or
dramatically reduced their rate hike proposals only after substantial
work has been done by consumer experts but before the Department of
Insurance has begun the process of conducting a formal hearing.

Recognizing the value of finding and blocking unfair rates as
quickly as possible, the Department issued amendments to the so-called
"intervenor regulations" to clarify that consumers and their experts
should be compensated for reasonable time and expenses associated with
protecting consumers from price gouging whether or not a formal hearing
was conducted.

"Insurance companies hate writing checks to the groups and
experts who stop them from fleecing consumers, but what they despise
even more is that these challenges save consumers tens and sometimes
hundreds of millions of dollars in unfair and excessive rates.
Californians get no bigger bang for the buck than when consumer groups
step in to block insurance companies from lining their own pockets,"
said FTCR’s Executive Director Douglas Heller.

Currently, FTCR is challenging excessive auto and homeowners
insurance rates proposed by Allstate, a home insurance rate hike
proposed by Farmers, a proposed auto insurance rate hike by Explorer,
and earthquake rate hikes sought by GeoVera and Fireman’s Fund. A
proposed decision is expected to be issued by the Administrative Law
Judge on Allstate’s auto insurance rates next week.

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FTCR is California’s leading public interest watchdog. For more information, visit us on the web at

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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