California Insurance Commissioner Ricardo Lara is pushing a change to the state’s long-standing intervenor regulations, which enable groups to intervene in rate hearings.
Lara on Friday released the amended text of proposed regulations for the intervenor and Administrative Hearing Bureau processes under Proposition 103, reforms he said will increase transparency, improve efficiency and ensure funds used in the rate review process serve the public interest.
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Lara has proposed several changes to state insurance laws to convince insurance carriers to return to writing homeowners insurance in riskier areas of the wildfire-prone state.
One group that has taken part in intervenor hearings is Consumer Watchdog. The California Department of Insurance in January released data showing Consumer Watchdog earned $1.4 million in fees last year from a program that pays people and advocates to intervene in rate hearings.
The intervenor program has come under scrutiny as carriers began pulling back from writing in the state. California Insurance Commissioner Ricardo Lara last year proposed modernizing the program to diversify the recipients of intervenor funds, which is part of the state’s insurance law, Proposition 103.
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Consumer Watchdog after Lara made his proposal in January said the compensation they received last year was for work challenging excessive rates dating back to 2021. It includes payment in 14 rate challenges the commissioner delayed payment that approvals were finally issued for in May.
The difficulty of getting paid for intervening is a primary barrier for organizations to participate in the program, according to the group.
“The data shows the intervenor process saves money and does not add time to rate increase requests,” Jamie Court, president of Consumer Watchdog, said in a statement. “Consumer Watchdog’s interventions have saved $6.5 billion for consumers at a cost of $14 million to insurance companies, or twenty five cents for every one hundred dollars saved. Commissioner Lara’s proposed regulations will prevent consumer groups from being paid and discourage participation. That could cost insurance consumers billions in savings over time.”
The amended text reflects months of stakeholder engagement and public input, according to the CDI. After reviewing comments from consumer advocates, insurers, legal experts, and members of the public, the department made revisions to address legal and constitutional concerns.
The amended text is now available for an additional 15-day public comment period.
The updated regulations include:
- Clarify prospective application so new rules apply moving forward.
- Replace the prior “vexatious” standard with an objective “wasteful” standard for fee determinations focusing on whether work advances the issues in a proceeding.
- Strengthen scrutiny of excessive billing on a task-by-task basis.
- Increase public access to rate proceeding documents by requiring timely online posting of pleadings, hearing calendars and decisions.
- Establish firm timelines and regular status updates from administrative law judges.
- Clarify definitions and procedural rules to streamline hearings.
The reforms are part of Lara’s Sustainable Insurance Strategy, aimed at stabilizing the state’s insurance market.
Topics California Legislation