California Consumer Groups Attack Insurance Reforms

California Governor Gavin Newsom has put an insurance trailer bill into his proposed budget. For those not knowing, a trailer bill makes statutory changes needed for budget implementation if a majority in both of the Legislatures houses approve.

As you know, California’s homeowners insurance market is in free fall. The governor has hinted that Insurance Commissioner Ricardo Lara’s proposed reforms are not moving fast enough and insurers are leaving the state or, if they’re not leaving, they’re suspending taking on new insureds or not renewing policies at their expiration date.

This is pushing more desperate consumers into the state’s insurer of last resort, the FAIR Plan.

Not waiting for the commissioner’s plan to be implemented, the governor’s trailer bill will force the California Department of Insurance to approve or disapprove any proposed insurance rate raise that is below 7% within 60 days.

“We need to stabilize this market,” Newsom said. “We need to send the right signals. We need to move.”

Proposition 103 — passed in the 1980s — requires the Department of Insurance to approve any rate increases. That fact stays in the trailer bill. The governor says the only change is requiring the department to move faster.

Consumer groups — as expected — oppose the bill and Lara’s proposed reforms. Six of them — Consumer Watchdog, Consumer Federation of California, Consumers for Auto Reliability and Safety, Consumer Federation of America, Consumer Protection Policy Center, and The Children’s Advocacy Institute — issued a joint statement stating this isn’t a good for consumers.

Consumer Watchdog says the bill excludes consumer opinions if the proposed rate increase is below 7%. The group says the 60 day rush will force Lara and his department to approve rate changes with limited information. Consumer Watchdog — and the other groups — contend it removes consumer participation in the process.

“Giving insurers the right to raise rates more quickly will only leave Californians paying higher rates, not get more insurance companies back in the market,” the groups said in their letter. “The largest insurance companies in California have received double digit rate hikes recently — 20% for State Farm that took effect in March on top of an additional 6.9% last year, three rate hikes adding up to 37% for Farmers in the last year — and the companies still refuse to write new business.”

Source link: San Francisco Standard — https://bit.ly/45nCjYA

Source link: Insurance Business America — https://bit.ly/45jw7AU

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