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

Sam Dean, Los Angeles Times on

Published in Business News

Michael Soller, Lara's spokesperson with the department, has been less coy about the "entity" in question. After Consumer Watchdog accused Lara of striking a secret deal with insurance companies in the fall, Soller put out a statement saying that the group's "cynical claims hide the truth that [it] has earned millions of dollars signing off on rate increases — while denying the reality that insurance has become impossible for some Californians to find at any price." He added that the group "is turning a blind eye to consumers' needs while defending its own insurance piggy bank."

While other consumer groups such as United Policyholders and the Consumer Federation of California have taken a more measured approach, Rosenfield has been blunt. "A commissioner more disposed to protect the industry has come along," Rosenfield said. "Ultimately, there's accountability for that within our system of democracy."

"He's kind of out a little bit on his own on this in terms of opposing what Lara's doing," said Brian Sullivan of Risk Information.

Increasingly, Consumer Watchdog is one of the only consumer advocates even participating in the Proposition 103 process. In the early days of the regime, half a dozen or so major consumer groups were willing to enter the fray. But over time, the pool of dedicated groups with the resources to fight long regulatory battles and only get paid months (and sometimes years) after their work begins, has dwindled to a handful. Now state records show that 75% of the time, if there's an intervening entity in a rate filing, it's Consumer Watchdog.

This is where the accusation of self-interest comes to bear. Since Rosenfield helped write Proposition 103, he also wrote in the fee mechanism that pays his salary at Consumer Watchdog. According to critics, that amounts to self-dealing at the consumers' expense.

State records show that over the last two decades, the group has been paid $11.6 million in fees by the state for its interventions in rate filings, or an average of $575,000 each year. Proposition 103 isn't Consumer Watchdog's only policy focus, nor is it the group's only source of revenue. Consumer Watchdog brought in $3.75 million in revenue in 2022 from donations, grants and other sources, according to public filings.

 

For that $11.6 million Proposition 103 payout, the group has been party to saving consumers $5.51 billion in the last two decades, according to an analysis produced by Consumer Watchdog. In the last five years, Consumer Watchdog says its actions have contributed to $2.1 billion in savings for Californians. The group arrived at these figures by comparing the dollar value of rate increases that insurance companies sought in the last 22 years against the final amount they got when Consumer Watchdog challenged their request.

In the last two years, when Consumer Watchdog intervened in a company's request to raise its rates, the final result for ratepayers ended up 38% lower than what the companies requested for home insurance, and 29% lower for auto insurance, on average. When Consumer Watchdog didn't enter the fray, the final amount approved by the state insurance department was only 2-3% lower than what companies requested on average, according to the report.

Soller, the insurance department spokesperson, calls these numbers "deeply flawed."

"Based on our review, their claims are highly inflated," Soller wrote in a statement. "They compared the amount originally requested by the insurance company to the amount approved, with no accounting for what the department's role was in that three-party negotiation."

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