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

Sam Dean, Los Angeles Times on

Published in Business News

In other words, it is impossible to attribute all of those savings to the group's intervention because state insurance regulators probably would have argued down the companies' requests on its own.

But the scale of California's insurance market means even small concessions can have a big effect on ratepayers. If Consumer Watchdog's interventions contributed 0.3% of those $5.2 billion that insurance rates have been pushed downward, then the group has saved Californians millions more than it's been paid in fees.

Rep. John Garamendi (D-Walnut Grove), who served as the state's first and fourth elected insurance commissioner, finds the attempts to discredit Consumer Watchdog disturbing, if not surprising.

"Yes, they're a big pain, but that's their job," Garamendi said. "These organizations are absolutely essential in the process of a rational insurance market, with premiums that are fairly priced, policies that are clearly understood and written, claims that are paid."

Sullivan, for his part, believes that the hate focused on Harvey and Consumer Watchdog is more of a sideshow than a debate about how to respond to the changing insurance market.

"It has nothing to do with the problems in the state," Sullivan said. "They're fighting amongst themselves over very little — it isn't the intervenor process causing the long delay times" that are at the root of the industry's problems with the regulatory system.


The fundamental problem, according to industry groups and observers, is that rate filings often take a year or more to work their way through the system, which can lead to a punishing lag between costs and revenues for insurers.

Many insurers are still limiting the number of new policies they write in California. If changes do come, it would take many months, and probably years, before they could ripple through to policies and change insurers' business decisions about operating in the state.

Commissioner Lara is hiring more staff and changing filing rules with the goal of speeding up the process. His office also plans to roll out new rules that could allow insurance companies to lock in higher prices further in advance, by allowing them to use algorithmic modeling to set higher prices for wildfire risk zones and pass through some of the costs of reinsurance — insurance policies that insurance companies themselves buy to cover their own losses.

Consumer Watchdog, in a surprise to no one, has some strong opinions about Lara's plans.

©2024 Los Angeles Times. Visit at Distributed by Tribune Content Agency, LLC.


blog comments powered by Disqus