Concerns about insurance reforms have been raised by California Democrats

A group of 32 Democrats from California’s congressional delegation have written Insurance Commissioner Ricardo Lara to express their worry that his proposed reforms would weaken consumer protections and the regulatory authority established by Proposition 103.

Representatives John Garamendi and Zoe Lofgren are leading a group of lawmakers who are concerned about the potential effects of Lara’s Sustainable Insurance Strategy, which includes an agreement to persuade insurers to return to specific fire risk zones in exchange for more flexibility when setting rates.

The letter cautions that Lara’s modifications “suggest dramatic changes to the commissioner’s regulatory power that may result in a diminution of the authority granted by California voters and your ability to create a stable insurance market in our state.”

They warned that the modifications could “threaten the important consumer protections established in Proposition 103” and asked for feedback on how to proceed with modifying the insurance regulatory framework.

In 1988, Californians voted to enact Proposition 103. The state’s Department of Insurance is now responsible for reviewing rate adjustments, and the position of insurance commissioner is one that is open to public election.

“We bring our concerns to your attention in anticipation of a comprehensive and transparent process of rulemaking, public hearings, and public comment on any proposed changes to the regulatory powers of the commissioner and process for approving any rate increases for policyholders,” the California representatives wrote in their letter.

To safeguard consumers against unchecked corporate interests, we believe a public procedure is necessary, and we are solid in our belief that any hasty action should be subjected to public assessment.

Consumer Watchdog expressed this concern last week. The group that Harvey Rosenfield assembled to draft Proposition 103 has written a letter to California’s governor and legislative leaders claiming that the state’s Sustainable Insurance Strategy does not go far enough in protecting customers and is full of “loopholes.”