California Department of Insurance & the Consumer Watchdog Recertification

Usually this is one of those cakewalk decisions. Every other year Consumer Watchdog tells the California Department of Insurance it represents the consumer, and it pretty much gets automatically re-certified.

Not this year.

The department has put off its decision on the recertification. A good reason why is not lost of those observing the current conflict between the CDI and Consumer Watchdog. It has been highly critical of Insurance Commissioner Ricardo Lara’s push to get insurers to return to California and begin writing homeowners policies again.

Consumer Watchdog Executive Director Carmen Balber calls the non-decision unprecedented and Orwellian. "To delay to invite the insurance industry to comment on whether we represent consumers is shocking," she said.

Gabriel Sanchez of the CDI says the delay is because the department is redoing a much overdue rulemaking and rate approval process.

“Commissioner (Ricardo) Lara is doing things differently,” he said. “Under his leadership, the CDI’s experts will not rubber-stamp any part of the rate regulation process.”

And part of that process is Consumer Watchdog’s input.

From the insurance company perspective, the certification of Consumer Watchdog is a money issue since being re-certified allows it to collect compensation from carriers. So to say that insurance companies “hate” Consumer Watchdog is an understatement.

The two sides have been at war for decades. Insurers ask for a rate hike to meet their needs and Consumer Watchdog pushes back. When the dust settles insurers end up charging rates that are much lower than they want.

Last year alone, Consumer Watchdog protested potential rate increase 500 times. However, the ability to collect fees from insurers expired on July 12th and some wonder if Consumer Watchdog is feeling a financial pinch.

Another issue is today’s market. Insurers are leaving the state’s homeowners market in droves. With the withdrawal of insurers from the market and Commissioner Lara’s proposed new rate changing system, a subtle question that’s being asked is if the CDI is wondering whether Consumer Watchdog’s influence is not helping but, instead, is hurting consumers.

Former California Insurance Commissioner Dave Jones says insurers think so. And many critics — mostly insurers — think the push to get rates lowered is simply a way to increase income.

”They argue the organization is using the process for its own financial gain. I think it’s not too strong to say that insurance companies hate Consumer Watchdog,” Jones said. “And they would rather it just go away.”

The department says it will likely rule on the recertification on or before August 2nd.

For a much more detailed look at the issue, go to the Sacramento Bee link at the bottom of this story.

Source link: Insurance Business America — https://bit.ly/3zV2eLJ