Consumer Watchdog Urges Newsom Not To Call State of Emergency On Insurance and Put Himself and Other 3% of Homeowners Over the 97% Who Would Face Rate Hikes

SACRAMENTO, Calif., Sept. 21, 2023 /PRNewswire/ -- The leaders of Consumer Watchdog today wrote Governor Newsom to dissuade him from declaring a state of emergency on insurance that would give Insurance Commissioner Ricardo Lara the power to raise homeowner rates by waiving the rules that have protected Californians against price gouging for the last thirty-five years.

"A very small percentage of California's insurance market – 3% – has been forced out of the California market into the FAIR plan," the letter from Consumer Watchdog founder Harvey Rosenfield and President Jamie Court stated. "As you recently acknowledged to Politico, you are among those homeowners unreasonably abandoned by the insurance companies in the private market and forced to buy a policy that is more expensive, with fewer benefits.

"While this is unfair to you and others, it does not constitute a statewide emergency that justifies forcing the other 97% of people in the homeowners insurance market to pay more for their insurance.

"By signaling a state of emergency, you would be empowering the Commissioner to put your 3% above the needs of the 97% -- without any guarantees that the 3% would even be offered insurance coverage."

Read the letter.

The letter continued: "By giving the Commissioner emergency powers to throw out the rules that protect against higher rates, you would be tacitly sending California on the same course as Florida. As you have acknowledged, Florida rates are 2 to 3 times as high and 5 times as many people there are in the equivalent of the Fair Plan."

Court and Rosenfield pointed out Lara's troubling relationship with the insurance industry.

"Insurance Commissioner Lara should not be entrusted with these extraordinary powers.

"Lara accepted tens of thousands of dollars in campaign contributions from insurance companies, after claiming he would not, then was forced to return them. Lara is currently under investigation by the Fair Political Practices Commission (FPPC) for illegally accepting contributions from insurance companies through a third-party committee during his last election and failing to disclose it."

"Lara was also the leader of the proposed back room deal in the legislature between insurance companies and builders that excluded consumers from the table. It collapsed because most lawmakers recognized it would be a disaster for their constituents. His public calendar for recent months is littered with meetings with insurance companies, but not a single meeting with consumer groups. Lara has refused to meet with Consumer Watchdog, ignoring written requests for nearly a year."

The letter stated: "If you declare a state of emergency that empowers Ricardo Lara to throw out rules protecting policyholders, you will be complicit in the rate hikes that ensue." 

"Don't Give In, Governor," Rosenfield and Court urged. "There are other ways to address the impact of climate change that we have outlined and can be worked out in the legislature with an appropriate public process. It cannot be solved unilaterally by bowing to the industry's self-serving demands and its extortionary threats that they will leave the state. A fair solution will only come with everyone at the table – including consumer groups like ours that have been excluded although we have effectively watchdogged this industry for 35 years."

The letter concluded: "Allowing insurance companies to boost premiums behind closed doors will NOT stop them from dumping customers who live in high risk areas, or even non renewing customers as way of decreasing their liability in the Fair Plan. This is a problem with land use that has nothing to do with the insurance companies demands for quicker, higher rates. 

"Please don't give Ricardo Lara the power to turn California into Florida."

SOURCE Consumer Watchdog