Chief Judge Says CA Insurance Regulators Flouted
Consumer Protections
LOS
ANGELES, Nov. 15, 2024 /PRNewswire/ -- The Chief
Administrative Law Judge of the California Department of Insurance
has concluded that the agency is flouting laws designed to protect
Californians against insurance overcharges and arbitrary
decision-making by the agency. The ruling has galvanized the
insurance industry and a Department attorney to ask Insurance
Commissioner Ricardo Lara to
overturn key portions of the Chief Judge's decisions.
In a lengthy rebuke of the procedures that Insurance
Commissioners have utilized when consumers challenge proposed rates
as unlawful under Proposition 103, Chief Administrative Law Judge
(CALJ) Kristin I. Rosi noted that
settlements between the Department, insurance companies and
consumer representatives must by law be subject to review by judges
within the agency's independent judicial unit, the Administrative
Hearing Bureau. That is "an essential part of [Proposition 103's]
rate proceeding framework, meant to ensure public oversight and
protection," Judge Rosi explained.
"When the parties ignore settlement regulations meant to provide
specific oversight, California
consumers are once again left without assurances that the
implemented rate is fundamentally fair and reasonable." And it
"permits insurance carriers and the Department to freeze out
consumer groups from any negotiated resolution in contravention of
Proposition 103's stated purpose of fostering public access and
information."
Read the CALJ Decision.
In a letter, Consumer Watchdog urged Mr. Lara "not to interfere
with the Decisions of the Chief Administrative Law Judge and the
Administrative Hearing Bureau in these matters."
"Neutral judges are a central principle of the rule of law,
which is why the voters intended that administrative law judges
oversee how rates are set under Proposition 103 to prevent
political interference," said Harvey
Rosenfield, founder of Consumer Watchdog and author of
Proposition 103. "We have long objected to the practices that the
Chief Judge has criticized, and we strongly embrace the principles
and protections of the Chief Judge's rulings. They are necessary to
maintain the integrity and fairness of the process under which the
Commissioner approves proposed rates."
Read Consumer Watchdog's Letter.
Read Filings from State Farm, Allstate, and insurance industry
lobbyists.
Read the Department of Insurance Rate Enforcement Bureau's
Letter.
Dispute Arises as Commissioner Lara Offers
Insurers Higher Rates, Less Public Scrutiny
Under insurance reform Proposition 103, insurance companies are
required to apply to the elected Insurance Commissioner for
approval of changes in rates and premiums; open their books to
public scrutiny and justify rate those changes before they go into
effect; and allow consumers to challenge requests they believe are
improper. The CALJ rulings – in six separate rate cases – confirm
that the Insurance Commissioner's staff, insurance companies, and
consumer groups that challenge excessive rates or unlawful
practices must present an agreement on a rate change to the
administrative judges who are independent of the Commissioner, for
their initial review.
Two major insurance companies, State Farm and Allstate – whose
previous rate increases are among those criticized by the CALJ's
rulings – have joined an agency attorney to urge the Commissioner
to reverse the Chief Judge. Four insurance industry Sacramento lobbying firms have also joined the
call to overturn the Chief Judge's rulings.
The CALJ's rulings come as Commissioner Lara has proposed new
regulations based on proposals long desired by the insurance
industry that will cause insurance rates to skyrocket for home,
renter, auto and small business insurance.
Lara has also announced a plan to undermine or eliminate key
procedural protections the voters established that mandate
insurance companies apply for approval of rate increases, open
their books to public scrutiny to justify rate changes before they
go into effect, and allow the public to challenge requests they
believe are unjust.
Consumer Watchdog has utilized Proposition 103 "public
participation" rights to save California consumers over $6 billion since 2003. Indeed, Chief Judge Rosi's
rulings were made in the context of requests submitted by Consumer
Watchdog for compensation for its work in those seven challenges.
Under Prop 103, insurers must pay for that advocacy when consumer
representatives make a "substantial contribution," a determination
made by judges at the Administrative Hearing Bureau. In each of the
orders by CALJ Rosi, Consumer Watchdog was found to have made a
substantial contribution to the outcome of the proceedings.
A little noticed provision in a bill backed by Lara and the
insurance lobby in 2023 to dismantle Proposition 103's protections
would have allowed him to appoint the CALJ. Sacramento lawmakers refused to consider the
legislation.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/state-farm-allstate-and-insurance-lobbyists-ask-lara-to-override-judges-decision-says-consumer-watchdog-302307462.html
SOURCE Consumer Watchdog