Lara proposes regulations to strengthen Prop 103 rate review and intervenor processes
California Insurance Commissioner Ricardo Lara has filed proposed regulations to modernize the state’s insurance market by strengthening the intervenor and rate review processes through enhanced transparency, fairness, and accountability under Proposition 103, according to a CDI press release.
The announcement follows news in August of a proposed ballot measure, penned by a California insurance intermediary, to reform Proposition 103, also nixing the election of the insurance commissioner and prior approval of rate-setting.
Lara’s proposed regulations would clarify the state’s intervenor process, for the first time protecting consumers from hidden fees, establishing clear guidelines for intervenor participation, and strengthening oversight of the administrative hearing system to prevent unnecessary delays, according to the release. The regulations also promise to make the process more open and accessible by preventing monopolization of the intervenor process.
“Consumers are frustrated with hidden fees, especially when insurance costs are already exorbitant and unaffordable for many,” said Lara, in the release. “California’s insurance crisis demands tough decisions and accountability from everyone involved — insurance companies, intervenors, and the department itself. To stabilize our market, we need a rate review system that delivers timely, fair, accurate, and thorough decisions, rather than one that gets bogged down in process or delays real solutions.”
Under Proposition 103, which was approved by voters in 1988, the insurance commissioner is responsible for ensuring that consumers don’t pay more to insurance companies and intervenors than is legally justified.
“While public participation is a cornerstone of Prop. 103, the current intervenor system has not been updated since 2006,” the release states. “Stakeholders, including consumer advocates, insurers, and the public, have expressed concerns that the process established decades ago by former Insurance Commissioner John Garamendi lacks transparency, is dominated by a small number of recurring participants, and can lead to unnecessary delays and costs for consumers and taxpayers.”
Lara added, “We want diverse voices to be heard from every corner of our state. Our rural and Sierra Nevada communities, which have been disproportionately affected by wildfires, have historically been excluded from the intervenor process. This regulation aims to create a stronger and more equitable system for all consumers across California, not just a select few who have mastered the current system.”
The release states that key reforms would include:
-
- “Clarifying the ‘substantial contribution’ standard for intervenor compensation to promote meaningful participation;
- “Requiring public reporting on intervenor activity and compensation to increase transparency;
- “Establishing firm timelines and responsibilities for administrative law judges, including mandatory 30-day status updates on pending cases to the public, so the public is informed of progress being made on these cases; and
- “Requiring the department to post public documents online, including hearing calendars and decisions, making them accessible to all Californians, and replacing outdated physical viewing rooms.”
Consumer Watchdog argues in a Sept. 21 statement that, “By making it harder for intervenors to be paid, he will discourage intervenors from participating.”
The intervenor cost is 25 cents for every $100 saved,” the statement states. “Lara approved 97% of the rate increase requested in rate filings from January 2022 to October 2023 without public intervenor participation. When Consumer Watchdog participated as an intervenor, the percentage of the rate increase approved in homeowner insurance cases was 62% and in auto insurance cases it was 71%.”
The state will accept public comments on the regulations for 45 days beginning Oct. 3. A public hearing will be held Nov. 20 at 1 p.m.
Images
Featured image credit: EtiAmmos/iStock