Consumer groups ask CA governor to halt insurance industry discussions, say they've been left out

Friday, September 8, 2023

Consumer groups ask to halt CA insurance industry discussions

Information floating around Sacramento points to an industry push for a major change in California's insurance regulations.

SACRAMENTO, Calif. (KGO) -- Information floating around Sacramento points to an industry push for a major change in California's insurance regulations.

"Rumors are abundant, but the thread through all of this is the consumer groups -- we have asked -- have been literally excluded from the conversation and negotiations by the insurance industry," says Robert Herrell, head of the Consumer Federation of California.

Ralph Nader is concerned, too. "So this means that a lot of the deals that are going to be cut will be cut in secret. There won't be public hearings and groups like Consumer Watchdog will be put on the sidelines," he says.

However, industry group the Personal Insurance Federation of California says: "We do not and have not had a legislative proposal."

VIDEO: Consumer group accuses California insurance companies of 'price fixing,' calls for investigation

In a letter sent to California's Attorney General, the group calls for an investigation into insurance companies and professional associations.

Consumer groups aren't so sure, and sent a letter to Governor Newsom and legislative leaders asking for a halt to discussions.

"This is no way to run a country. This is no way for the state of California to conduct its business," Herrell says.

There is also a memo being passed around in which a handful of business groups say Insurance Commissioner Ricardo Lara supports an industry proposal. 7 On Your Side asked the Commissioner's office and did not get an answer to that question but were told in part: "... Many claims are flying. The Commissioner is actively at work on behalf of consumers and moving at the speed of good decisions on what's best for the health of the market."

MORE: How can insurance in California be reformed? Industry experts and consumer advocates weigh in

California insurance companies are underwriting fewer policies and even leaving the state. But why are these companies pulling back?

Congressmember John Garamendi was California's first Insurance Commissioner and wrote much of what regulates the industry today. "The Governor seems to be fearing a crisis," Garamendi says. "The legislature doesn't know what to do and the insurance industry seems to be writing the playbook."

Garamendi says any proposal passed in this legislative session would be bad news for consumers. "If they succeed, guaranteed California policy holders are going to once again be screwed by the insurance industry," he says.

MORE: Secret recording of insurance lobbyist reveals plan to 'jam' bill through before end of session

A consumer advocate overheard an insurance industry lobbyist discussing strategy on a flight from Los Angeles to Sacramento and secretly recorded it.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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