Suit Alleges More than 10,000 Secret Rate Actions in Past Two Years
The Proposition 103 Enforcement Project, a project of The Foundation for Taxpayer and Consumer Rights, filed a lawsuit this week against Insurance Commissioner Chuck Quackenbush revealing that the Department of Insurance has systematically and secretly approved approximately ten thousand insurance company applications for auto, homeowners and business insurance, costing consumers millions and millions of dollars in rate increases.
In just one of the many examples cited by the Project in the lawsuit, the Commissioner approved 20th Century Insurance Companyís request for a 6% rate increase for its homeowners insurance without giving the public notice of the increase. In another example cited by the Project, the Commissioner gave the public “notice” of a request by USAA General Insurance Company of a 10% rate decrease for its personal auto line of insurance, and yet he approved a 10% rate increase for USAA General. The impact on consumers of this one 10% rate increase alone is approximately 45 million dollars.
“Quackenbush‘s flagrant disregard for the law has cost consumers tens and probably hundreds of millions of dollars in illegal rate increases,” said Lillian Salinger, staff attorney for the Project. “The Commissioner has been secretly approving rate increases behind consumersí backs; an attack against the very heart of Proposition 103, which is a protection against unfair rate increases,” said Salinger.
The following is just some of the evidence which supports the Project’s lawsuit:
- The Commissioner approved at least 9,717 insurer applications without giving consumers the minimum time required by law to challenge such applications.
- In at least 251 instances, the Commissioner gave “notice” to the public of insurer applications either on the same day or after he already approved the insurer applications. Thus, consumers had no opportunity to challenge the rate applications.
- The Commissioner did not provide any public notice at all of certain insurer applications.
Proposition 103, the 1988 voter-approved initiative, requires insurance companies seeking rate changes to first file insurer applications with the Insurance Commissioner for his approval. Proposition 103 prohibits insurers from charging rates that are “excessive” or “unfairly discriminatory.” The Commissioner has the legal duty to timely notify the public of any application by an insurer for a rate change. Consumers have the right, within a limited time frame, to challenge rates and unfair practices of insurance companies. Thus, under Proposition 103, the public must be notified in a timely manner of insurer applications filed with the Commissioner so that consumers can pursue their right to challenge these insurer applications. The Projectís lawsuit demonstrates that the Commissioner is failing to comply with the public notice provisions of Proposition 103.