He claims to have saved California homeowners billions. The insurance industry hates him

Sam Dean, Los Angeles Times on

Published in Business News

Insurance industry groups have called it a "bomb-throwing bogus advocacy" group, a "publicity-seeking, dark money front," and an organization out to protect its own "financial $elf-interest$."

These are the kinds of attacks that Harvey Rosenfield and Consumer Watchdog, the advocacy group he founded nearly 40 years ago, have come to expect.

But in the last year, as home insurers have stopped writing new policies and retreated from parts of the state prone to wildfire, a new voice has joined the ranks of critics who say Harvey and Co. are making things worse: California's elected insurance commissioner, Ricardo Lara, whose office has called Consumer Watchdog an entrenched interest group "defending its own piggy bank."

If attacking a public advocacy group seems like an odd stance for an elected official, it's made even odder by the fact that Lara wouldn't have his job if it weren't for Consumer Watchdog.

To understand the beef, you need to understand Proposition 103, a California law governing the insurance industry.

The campaign for that ballot measure in 1988 was one of the first missions of Consumer Watchdog, which formed in the wake of Ralph Nader's success in spurring new consumer regulation.


That proposition, which Rosenfield helped write, enacted some of the most stringent insurance industry regulation in the nation. First, it created the office of an elected insurance commissioner to head the state Department of Insurance. Any time an insurance company seeks to raise prices, Proposition 103 requires that the firm apply to the commissioner for prior approval.

The goal, according to the text of the act, is to provide transparency into the insurance market and prevent insurers from charging "excessive, inadequate or unfairly discriminatory" rates to policyholders.

Nearly 35 years after Proposition 103 went into effect, Californians pay less for auto and home insurance than most Americans, with the state ranking among the bottom half of states for prices in both categories. But insurers say that long processing times for rate increases, among other regulations, have made it difficult to do business in the state as inflation and wildfire risks are on the rise.

One specific criticism of Consumer Watchdog revolves around a unique proviso of Proposition 103. The law allows public groups such as Consumer Watchdog to intervene in an insurance company's application for a rate increase and argue — alongside the Department of Insurance — for what the ultimate price should be.


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