California ballot battle heats up over insurance consumer protection

Consumer Watchdog has filed a counter ballot initiative in California, which it says is aimed at reinforcing consumer protections in response to a separate proposal by a state insurance agent that seeks to roll back parts of Proposition 103.

The measure would require insurers to refund excess charges and mandate that homeowners insurers offer coverage to any property meeting wildfire mitigation standards set by the California Department of Insurance (CDI). Insurers that exit the homeowners market would be barred from selling auto or home policies in California for five years.

If enacted, the initiative would prevent insurers from dropping or denying coverage to homeowners who inquire about a claim, file a claim that is not covered, or submit a claim where another party was at fault, provided the risk of loss is removed.

It also reaffirms Proposition 103’s requirements for prior rate approvals, the election of the insurance commissioner, and the intervenor process, which Consumer Watchdog frequently uses.

Proposition 103

Proposition 103, passed in 1988, transformed California’s insurance landscape by requiring prior approval for rate changes, making the insurance commissioner an elected position, and opening the door for consumer groups to challenge rate hikes.

While these measures have long existed to protect consumers, they are now at the center of debate as insurers cite regulatory hurdles for exiting the market.

Other wildfire-prone states, such as Colorado and Oregon, have taken different approaches to maintain coverage availability, including focusing on public-private partnerships, state-backed insurance pools, and flexible rate-setting.

Under the proposed “Policyholder Bill of Rights,” insurers would be required to provide at least six months’ notice before nonrenewal, along with a detailed list of improvements that could reverse the decision and time for homeowners to make repairs. The measure would also prohibit insurers from dropping or denying coverage for asking about a claim or filing certain types of claims.

“Cynical attempt to grab headlines”

Denni Ritter, vice president of state government affairs at the American Property Casualty Insurance Association, criticized the Consumer Watchdog proposal as a “cynical attempt to grab headlines and deflect from its obstructionist, self-interested actions that have fueled California’s insurance crisis.”

Ritter also accused Consumer Watchdog of exploiting the intervenor process for financial gain and argued that the initiative would not stabilize the market but instead serve as a distraction.

The initiative would limit auto insurers to rating drivers based only on safety records and other factors within a motorist’s control. Christian Rataj, West senior regional vice president at the National Association of Mutual Insurance Companies (NAMIC), said eliminating proven rating factors would “reduce accuracy in consumer pricing and force safer drivers to subsidize riskier ones.”

Rataj also said that the proposal appears inconsistent with the California Department of Insurance’s recent Sustainable Insurance Strategy, which aims to increase consumer choices.

This is not the first time this year that the APCIA has exchanged words with Consumer Watchdog over California’s troubled insurance landscape. In April, the insurance trade body called Consumer Watchdog’s lawsuit against the CDI and Insurance Commissioner Ricardo Lara “reckless and self-serving,” arguing that it will only make the crisis in the state worse.

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