California insurance chief seeks to change law on ‘intervenors’

Ricardo Lara proposes stricter funding rules for consumer groups challenging rate hikes.

- By LAURENCE DARMIENTO

One hallmark of the 1988 ballot measure that governs California's auto and home insurance code allows the public to review insurer requests for rate increases — and get paid by those same insurers for the costs of doing so.

It’s a provision that has irked the industry ever since the measure, Proposition 103, also established an elected insurance commissioner with the authority over rates.

Now, current Commissioner Ricardo Lara wants to more tightly regulate the process and make it harder for so-called “intervenors” to get reimbursed for their work.

Lara contends that existing regulations, which were updated in 2006, have enriched a single Los Angeles advocacy group, Consumer Watchdog, which he claims has taken credit for rate savings his regulators already extracted from insurers — all while delaying reviews at a time when wildfires have caused carriers to write fewer policies in California.

“To stabilize our market, weneed arate review system that delivers timely, fair, accurate, and thorough decisions, rather than one that gets bogged down in process or delays real solutions,” Lara said ina statement.

Although the release doesn’t cite Consumer Watchdog, it links to a document showing Consumer Watchdog was the recipient this year in 24 of 26 recent rate cases and received all but $47,500 of the $147 million in payments.

Lara has previously accused Consumer Watchdog of continuing to “profit under Prop. 103 in the millions through higher rates on policyholders when insurance companies seek justified rates from my Department,” he said in July.

The group founded by Harvey Rosenfield, author of Proposition 103, has defended itself, saying Lara’s proposal is a giveaway to the insurance industry.