Santa Monica, CA – Consumer Watchdog will be in court tomorrow to oppose a request by State Farm, California’s largest insurance company, to postpone refunds of more than $100 million in overcharges on home, condo and renters insurance, and delay a 7% rate cut that would save customers $156 million per year (including the savings from denying the 6.9% rate increase sought by State Farm). The savings are mandated under Proposition 103, the voter-approved insurance reform law.
San Diego Superior Court Judge Katherine A. Bacal will hold a hearing tomorrow afternoon at 1:30 p.m. on State Farm’s request for the delay, which was filed a little more than a week ago in connection with a lawsuit the insurance company brought on November 23. The suit seeks to overturn the refund and rate reductions ordered by the state Insurance Commissioner after a detailed hearing, requested by Consumer Watchdog and the Consumer Federation of California, challenging State Farm’s rates.
State Farm claims it cannot afford the rate reductions; but evidence in the hearing shows that is false. Ironically, the company has also filed a separate suit trying to bar the public from scrutinizing this kind of evidence, one of the rights afforded the public by Proposition 103.
If State Farm’s request for a delay for the duration of the court case is granted, it could be years before the reductions and refunds occur.
“In this situation, a delay in the rate reductions would be a perfect example of ‘justice delayed is justice denied,’” said Harvey Rosenfield, the author of Proposition 103 and one of Consumer Watchdog’s lawyers in the case. “State Farm has no right to keep money that belongs to its policyholders and continue to overcharge new and existing customers while its lawyers tie the savings up in frivolous court challenges. Proposition 103 is the law of the land. State Farm is entitled to its day in court but not at the expense of California consumers.”
Buried in State Farm’s lawsuits are challenges to consumer protections that have barred insurance companies from charging excessive rates since the voter revolt that led to the passage of Proposition 103 in 1988, and that have been upheld by the California Supreme Court. A similar challenge by Mercury and insurance trade groups, funded by State Farm and other insurance companies, is underway in the courts in Sacramento.
Read Consumer Watchdog’s brief opposing the delay: http://www.consumerwatchdog.org/resources/2016-12-12_42_cwd_opp_to_sf_motion_for_stay.pdf
Read Consumer Watchdog’s December 8, 2016 news release about State Farm’s lawsuit: http://www.consumerwatchdog.org/newsrelease/state-farm-sues-avoid-256-million-refunds-and-rate-savings-consumers
Read Consumer Watchdog’s August 8, 2016 news release about the refunds and reductions ordered by the Insurance Commissioner: http://www.consumerwatchdog.org/newsrelease/judge-finds-state-farm-overcharged-consumers-85-million-proposes-refunds-and-156-million
Read Consumer Watchdog's April 11, 2016 brief in support of rate refunds and decreases for State Farm's customers: http://www.consumerwatchdog.org/resources/4-11-16cwdopeningbriefpublic.pdf
Read State Farm’s two lawsuits here: http://www.consumerwatchdog.org/resources/2016-11-23_1_confidentiality_writ_petition_with_exhibits.pdf
Read more about Proposition 103 and how it has saved Californians hundreds of billions of dollars: http://www.consumerwatchdog.org/focusarea/prop-103-california-insurance-reform
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Consumer Watchdog is a non-profit, non-partisan organization. It has invoked the public participation process under Proposition 103 to save auto, home and medical malpractice insurance policyholders over $3 billion since 2003.