LOS
ANGELES, Aug. 9, 2024 /PRNewswire/ -- Consumer
Watchdog issued the following statement about Commissioner Lara's
action today threatening consumers' voice in insurance rate
review.
"For the past two months Consumer Watchdog has shared with state
lawmakers our concerns that the budget trailer bill proposed by
Governor Newsom and Insurance Commissioner Lara would cut the
public out of insurance rate review and cost consumers billions of
dollars. The Commissioner's abrupt action today to abandon the bill
in favor of unilateral executive action makes clear those concerns
were gaining traction," said Carmen
Balber, executive director of Consumer Watchdog. "However,
we remain concerned that the new procedures announced by the
Commissioner will short-circuit public participation and rates will
be rubber-stamped."
Today's bulletin mirrors provisions of the withdrawn budget
trailer bill that would:
- Curtail consumers' voice in rate increases below 7% by
preventing the public from meaningfully participating before a rate
increase is approved
- Require the insurance commissioner to make rate decisions based
on incomplete information
- Encourage insurers to apply for three 7% rate hikes a year to
avoid public hearings
"Consumer Watchdog will analyze this action to determine if it
is an illegal underground regulation or otherwise violates
Proposition 103 by shutting consumers out of the process," said
Balber.
The public intervenor process results in significant savings for
consumers. A review of home insurance rates approved in 2022 and
2023 shows that when the commissioner reviewed rates on his own,
insurance companies got on average 97% of the rate increase they
sought. When Consumer Watchdog participated, home insurance
companies received on average 62% of the increase they
requested.
Consumer Watchdog endorsed timely rate review and said it need
not come at the expense of public participation. A review of rate
approvals in 2022 and 2023 shows that intervenors do not slow the
process down. The average approval time for home insurance rates
was the same in 2022-23 whether Consumer Watchdog participated, or
the commissioner acted on his own.
Consumer Watchdog rate challenges over two decades, 2002-2024,
have resulted in $6 billion in
savings for consumers. More than half of these challenges involved
rate increase requests below 7% which are targeted by the
bulletin.
Read the letter six consumer groups sent to the governor and
legislative leaders opposing the trailer bill and a chart showing
problems with the trailer bill and amendments proposed by Consumer
Watchdog.
Read the study, "How Citizen Enforcement of Proposition 103
has Saved Californians $5.5 Billion –
and Why the Insurance Industry Hates It," for more information
about how the public intervenor process gives consumers a voice in
rate review and saves consumers money.
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SOURCE Consumer Watchdog