California Insurance Commissioner Ricardo Lara is pushing for changes to the state’s longstanding intervention regulations, which enable groups to intervene in rate hearings.
Lara on Friday released revised text of proposed regulations for the Intervenor and Bureau of Administrative Hearings process under Proposition 103, which he says would increase transparency, improve efficiency and ensure funds used in the rate review process are in the public interest.
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Lara has proposed several changes to state insurance laws to persuade insurance carriers to return to writing homeowners’ insurance in the state’s wildfire-prone areas.
One group that has participated in intervention hearings is the Consumer Watchdog. The California Department of Insurance released data in January showing the consumer watchdog earned $1.4 million in fees last year from a program that pays people and attorneys to intervene in rate hearings.
The intervention program has come under scrutiny as carriers in the state have begun pulling back from writing. California Insurance Commissioner Ricardo Lara last year proposed modernizing the program to diversify recipients of intervener funds, part of the state’s insurance law, Proposition 103.
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The consumer watchdog said after Lara’s proposal in January that the compensation they received last year was for work challenging the high rates before 2021. This includes the payment of 14 rate challenges for which the commissioner delayed payment for which approval was issued in May.
According to the group, difficulty obtaining payment for interventions is a primary barrier for organizations to participate in the program.
“The data shows that intervention saves money and doesn’t add time to increasing claims rates,” Jamie Court, president of the consumer watchdog, said in a statement. “Consumer watchdog interventions have saved consumers $6.5 billion at a cost to insurance companies of $14 million, or twenty-five cents for every $100 saved. Commissioner Lara’s proposed regulations would prevent consumer groups from paying and discourage participation. This could save insurance consumers billions over time.”
According to CDI, the revised text reflects months of stakeholder engagement and public input. After reviewing comments from consumer advocates, insurers, legal experts, and members of the public, the Department made revisions to address legal and constitutional concerns.
The revised text is now available for an additional 15-day public comment period.
The updated regulations include:
- Clarify the potential application so that new rules apply moving forward.
- Replace the former “nuisance” standard for fee determinations with an objective “frivolity” standard that focuses on whether the work raises issues in an action.
- Strengthen overbilling checks on a task-by-task basis.
- Increase public access to rate processing documents by requiring timely online posting of applications, hearing calendars and decisions.
- Establish firm timelines and regular status updates from administrative law judges.
- Clarify definitions and procedural rules to streamline hearings.
The reforms are part of Lara’s sustainable insurance strategy, which aims to stabilize the state’s insurance market.
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California Legislation
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