California insurance bailout plan sparks outcry from advocacy groups
California insurance bailout plan sparks outcry from advocacy groups | Insurance Business America
Insurance News
California insurance bailout plan sparks outcry from advocacy groups
Groups say plan is being “rushed through in secrecy”
Insurance News
By
Mika Pangilinan
A coalition of consumer, environmental, and economic justice organizations is sounding the alarm on what they describe as a secretive wildfire insurance deal that could lead to significant rate hikes in California.
In a letter addressed to Governor Gavin Newson and state legislative leaders, the coalition asked for transparency, claiming that public interest groups have been deliberately excluded from negotiations over an insurer bailout and deregulation plan.
It criticized the rush to finalize the deal during the final weeks of the legislative session without sharing the specifics with the public, asserting that a “multi-billion-dollar bailout” of the insurance industry should undergo a public debate to maintain consumer protections.
“It is particularly offensive that this proposal is being rushed through in secrecy during the final weeks of the legislative session,” the letter said. “A plan to bail out the insurance industry and make Californians pay demands a thorough public debate, but the details of this proposal have yet to be seen in public.”
The coalition of organizations, which include Consumer Watchdog, Californians for Auto Reliability and Safety, and Public Citizen, pointed to news reports about how the proposed deal could “raise rates dramatically” and urged lawmakers to reject it.
“In addition to consumers bailing out insurers for their responsibilities to the FAIR Plan, we understand the proposal also would: give insurance companies, in violation of Proposition 103’s strongest-in-the-nation rate regulation, rushed, unjustified rate hikes; pass through to policyholders the unregulated costs of reinsurance; and allow the use of black box algorithms to set insurance rates – pushing homeowners’ rates ever higher,” the letter stated further.
A news release from the consumer advocacy group urged that the public remain vigilant until today’s deadline for new legislation to be put in print passes.
“Until lawmakers and Insurance Commissioner Ricardo Lara say they are not going to pursue the insurance industry’s billion-dollar bailout plan, California consumers must remain alert for an 11th-hour smash and grab,” the release stated.
More groups voice opposition to bailout plan
Over the weekend, Consumer Watchdog also brought attention to additional statements opposing plans for a bailout.
“September is a scary time in the Capitol,” said the San Diego Union Tribune. “As the legislature hurries to finish its work before adjournment, state lawmakers have a history of making decisions on complex issues that come back to haunt Californians. Newsom and the legislature must not rush through huge changes to property insurance.”
“The insurance industry seems to be writing the playbook,” said Bay Area congressman John Garamendi, the state’s first elected insurance commissioner. “If they succeed, [it’s] guaranteed California policyholders will again be screwed by the insurance industry.”
Consumer advocate Ralph Nader, a signatory in the letter sent to Newsom, echoed these concerns and said the deregulation of Proposition 103 protections would “lead to immediate and enormous increases in what people will pay for insurance in California.”
What are your thoughts on this story? Feel free to comment below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
