Draft of insurance reforms would allow companies to not cover wildfire areas, advocacy group says

Friday, November 3, 2023

Draft of insurance reform allows companies to not cover wildfire areas

"When you look at the fine print of the proposal, that we obtained, that the commissioner drafted, there's absolutely zero commitment to come back into the marketplace," said one consumer advocate.

SACRAMENTO, Calif. (KGO) -- This past session, the California legislature declined to pass changes to the regulation of insurance companies. The Insurance Commissioner, Ricardo Lara, was said to have a proposal floating around in private, but the parent of California insurance regulation, Consumer Watchdog, was never shown any planned regulations. Consumer Watchdog filed a public records request and says the documents it received proves the proposed bill was a lousy deal for consumers.

"We did get this one draft proposal that was apparently drafted by the Insurance Commissioner that would give away all his authority and power over the insurance companies," says Harvey Rosenfield of Consumer Watchdog. "It would basically deregulate the insurance companies."

A big selling point for the proposal, 7 On Your Side was told, was a guarantee that insurance companies would sell more insurance in difficult-to-insure parts of the state, like wildfire areas. The documents, as read by Consumer Watchdog, would allow insurance companies to wiggle out of that part of the agreement.

"When you look at the fine print of the proposal, that we obtained, that the commissioner drafted, there's absolutely zero commitment to come back into the marketplace," says Rosenfield.

7 On Your Side asked for an interview with Commissioner Lara. He did not reply, but we did receive a statement from Deputy Insurance Commissioner Michael Soller: "Consumer Watchdog's latest cynical claims hide the truth that the group 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... Consumer Watchdog is turning a blind eye to consumers' needs while defending its own insurance piggy bank."

The deputy commissioner is referring to a portion of the Commission's website. It says public participation in the rate setting process is authorized to recover their costs, expenses, and attorney's fees. Deputy Commissioner Soller says Consumer Watchdog has collected nearly $9 million. Consumer Watchdog says its challenges to homeowner's insurance rates have saved Californians $2.2 billion.

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

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