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Consumer Watchdog slams new Lara proposal

Consumer Watchdog slams new Lara proposal | Insurance Business America

“The commissioner’s whole plan could turn California into Florida”


Terry Gangcuangco

Consumer Watchdog has voiced concerns that home insurance will continue to be unaffordable and difficult to obtain for many Californians under newly proposed regulations from Insurance Commissioner Ricardo Lara.

In the consumer advocate’s view, the proposal will let insurance companies “off the hook” after failing to meet their insurer commitments as long as they are supposedly taking reasonable actions towards compliance. Additionally, firms can also replace their commitments with alternatives.

“The proposed regulations purport to require insurance companies to increase sales to homeowners in ‘distressed areas’,” noted Consumer Watchdog. “However, the proposal would not require insurance companies to charge a price that consumers are able to afford, and the requirement could be waived if insurers cannot meet it.

“In return, insurance companies will get double-digit price hikes from allowing insurance companies to use unverifiable secret algorithms to set prices. That will drive insurance premiums even more out of reach for many Californians.”

It added that insurance companies will also be allowed to continue “redlining” distressed locations.

“Insurance commissioner Lara’s plan gives insurance companies two years to comply, but they can start to charge more immediately,” Consumer Watchdog executive director Carmen Balber stated.

“After two years, if insurance companies can say they can’t meet their goals, the commissioner can just move the goal posts. This was the one consumer benefit in Lara’s proposal, but the exceptions swallow the rule.”

Balber continued: “A promise to expand coverage with unaffordable policies isn’t going to get California home, condo, and apartment owners insured again. What happens when companies fail to meet their commitment because premiums are out of consumers’ reach? The commissioner will be allowed to waive the commitment.

“The way to guarantee more Californians coverage is to require insurance companies to sell to every homeowner who does the right thing and protects their home from wildfire. The commissioner’s whole plan could turn California into Florida, where insurance companies got everything they want and people still can’t get coverage.”

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