Little Hoover Commission Calls for Greater Transparency and Accountability in Home Insurance Market, Says Consumer Watchdog

Insurance Commissioner Ricardo Lara Refused to Testify or Meet with Commission

SACRAMENTO, Calif., Nov. 21, 2024 /PRNewswire/ -- Consumer Watchdog endorsed many of the recommendations released today by the Little Hoover Commission, including those for greater public oversight of the secret algorithms insurance companies use to decide who pays more for home insurance and who is not covered at all. The report recommends insurers be required to include individual, community, and statewide wildfire mitigation efforts in insurance underwriting and rate decisions, advice critical to restoring insurance access in California, said Consumer Watchdog. 

The commission calls out Insurance Commissioner Ricardo Lara's refusal to testify or even engage with the Commission over the year-long course of its investigation, and identifies the lack of data available to the public about the home insurance market from the Department of Insurance as a key area for reform.

The commission's report also called for statewide, open data collection and core standards surrounding wildfire mitigation. Consumer Watchdog said these recommendations will enable another critically needed consumer protection: a statewide mandate for home insurance companies to cover Californians who do the right thing to protect themselves, and their communities, from wildfires. 

"The Little Hoover Commission gives key recommendations that will make insurers' actions more transparent and give Californians credit for the billions that have been invested in protecting our communities from wildfire. Californians can't access affordable insurance because no one is holding the insurance industry accountable. It's inexcusable that Insurance Commissioner Ricardo Lara couldn't be bothered to speak to the Commission and answer for his actions," said Carmen Balber, executive director of Consumer Watchdog.

In a letter to the legislature, Little Hoover Commission Chair Pedro Nava wrote, "Unfortunately, throughout the Commission process one voice was voluntarily absent – that of the Insurance Commissioner or anyone from the California Department of Insurance. …The Commission appreciates the testimony from former Insurance Commissioner Dave Jones and received input from former Insurance Commissioner Steve Poizner. That the current Insurance Commissioner did not participate is inexplicable and irresponsible."

Financial assistance for individual and community mitigation efforts, also recommended in the report, is needed to guarantee that Californians' access to coverage is not limited to those who can afford costly upgrades, said Consumer Watchdog.

Read the Little Hoover Commission Report. 

Watch Consumer Watchdog's testimony and view the slide presentation made before the Little Hoover Commission in March of this year. 

Consumer Watchdog disagreed with the report's embrace of two proposals the insurance industry has convinced Insurance Commissioner Ricardo Lara to impose, including the use of private catastrophe models that are opaque and unaccountable to the public to project future costs. Consumer Watchdog said the creation of a public wildfire catastrophe model, which the commission's report also endorsed, is necessary to enable full transparency and public oversight of models' climate and cost predictions. The suggestion that insurance companies be allowed to charge consumers for the unregulated cost of reinsurance will cause double-digit rate increases in the first year alone, said the group.

SOURCE Consumer Watchdog