Consumer Watchdog Responds To Industry Attack On Its Right To Challenge Unjustified Rate Hikes; Calls On Insurance Commissioner Lara To Follow Law & Confirm Its Eligibility

LOS ANGELES, July 15, 2024 /PRNewswire/ -- Consumer Watchdog called on the Department of Insurance to stop erecting roadblocks to public oversight and confirm the organization's eligibility to challenge excessive insurance rates and abusive practices on behalf of consumers without further delay.

Consumer Watchdog Logo (PRNewsfoto/Consumer Watchdog)

The Department of Insurance halted approval of Consumer Watchdog as a consumer representative and sought insurance industry comment on whether the organization qualifies to represent consumers before the Department of Insurance.

Read the organization's response brief submitted to the Department of Insurance.

The department's recent actions depart from the law, said the brief.

Consumer Watchdog's "Request for Eligibility" filed on June 3, 2024 complied with all the requirements of the regulation. Department staff confirmed the application was complete on June 17 yet delayed ruling. The sole purpose of a request for finding of eligibility is to obtain a preliminary determination that a person or organization does in fact represent consumers. No previous commissioner has ever sought industry opinions on who represents consumers.

Consumer Watchdog has previously been confirmed as a consumer representative by the Department of Insurance 15 times, including in 2022 by Insurance Commissioner Ricardo Lara.

"Consumers need a voice at the Department of Insurance now more than ever before as insurance companies refuse to sell in many parts of the state and seek double-digit rate increases everywhere else, including an extraordinary 30% rate hike request made by State Farm last month," said Carmen Balber executive director of Consumer Watchdog.

Consumer Watchdog has saved insurance policyholders $6 billion by challenging excessive insurance rates since 2002.

The insurance lobbying group Personal Insurance Federation of California (PIFC) acknowledged in comments filed with the Department that the organization is targeting Consumer Watchdog for its advocacy on behalf of consumers in the broader "legislative and regulatory negotiations" regarding the "California insurance market." The insurance industry seeks to punish Consumer Watchdog for, as PIFC head Rex Frazier told Politico, its "bad behavior." Frazier was Deputy Insurance Commissioner under former Commissioner Chuck Quackenbush when he attacked the intervenor system before being forced out of office in an insurance pay-to-play scandal.

"It is not up to the industry to decide whether a consumer group represents the interests of consumers, and a finding of eligibility certainly does not hinge on whether the insurance companies or the Department agree with a consumer group's positions," said the brief.

16 public interest organizations also responded to the attack on public participation by submitting letters to the department. A coalition letter expressed, "our deep concern with recent Department of Insurance actions that create new extra-regulatory hurdles to independent public scrutiny of insurance rates, regulations, and enforcement of the state's insurance consumer protection laws."

The groups signing the coalition letter include: 350 Bay Area, California Public Interest Research Group (CALPIRG), Center for Biological Diversity, Consumer Attorneys Association of Los Angeles (CAALA), Consumer Federation of America, Consumers for Auto Reliability and Safety, Food & Water Watch, FracTracker Alliance, Life Insurance Consumer Advocacy Center, Public Advocates Inc., Public Citizen, Rise Economy, The Protect Our Communities Foundation, and TURN-The Utility Reform Network. Read the letter.

The University of San Diego Consumer Protection Policy Center at the Center for Public Interest Law, and the Consumer Attorneys of California, also submitted letters. Read the CPPC and CAOC letters.

"Targeting notices of objections towards the insurers that often seek faster rate increases is of great concern to consumer protection. The additional queries of eligibility to seek compensation by the most active consumer protection intervenors can only lead to further discouragement of intervenor participation designed under Proposition 103," wrote the Consumer Protection Policy Center.

Voter-approved insurance reform initiative Proposition 103 created a "public intervenor" process to give consumers a voice in insurance rate oversight and encourage public participation. Intervenors provide the Insurance Commissioner independent outside expertise and act as a check on the Department if a Commissioner fails to act in consumers' interests.

For more information on the public participation process read the study, "How Citizen Enforcement of Proposition 103 has Saved Californians $5.5 Billion – and Why the Insurance Industry Hates It."

View the history including letters submitted by then insurance industry here.

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