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OLDWICK, N.J. -- Certain life insurance agents and broker-dealer firms could face increased legal liability depending on how the U.S. Securities & Exchange Commission rules on the fiduciary standard pertaining to the sale of investment products. The concern among affected parties is the possible increased legal liability or financial penalties from the SEC if they don't meet the new standard, said Carmen Balber, director of the Washington, D.C. office of Consumer Watchdog.

As an Aug. 31 deadline nears, state lawmakers haggle over how difficult it should be for companies to significantly raise premiums.

Consumer groups, meanwhile, say that allowing insurance companies to pick the actuaries who review their filings would give them too much influence over the process. "Insurance companies in California will be getting millions of new customers, and the least that Californians should get in return is strong oversight of rates and premiums," said Judy Dugan, research director for Consumer Watchdog in Santa Monica. "Instead, the governor's proposal would prevent effective oversight."

OLDWICK, N.J. --Since the passage of U.S. health care reform, battles have erupted in some states between insurance commissioners and health insurers over double-digit premium rate increases sought by insurers on members in their individual and small group health plans. With more talk at the federal level about the need for oversight of excessive rates, insurance commissioners are interested in showing that they are acting to protect consumers, said Carmen Balber, director of the Washington, D.C. office for Consumer Watchdog. Insurance departments are scrutinizing premium rates because consumers "have reached their breaking point," said Balber. Complaints are rolling into departments from consumers who cannot pay "the outrageous prices" insurers are charging, she said.

A consumer group warned in a letter to U.S. Health and Human Services Secretary Kathleen Sebelius that health insurers “cannot be trusted” when lobbying over provisions of the new federal health reform law. “The insurance industry is lobbying now for loopholes in regulatory language that would make it unnecessary for insurers to make mathematical ‘errors’ in order to meet the law’s requirement that they spend 80% to 85% of premium dollars on health care,” the letter to Sebelius suggests. Judy Dugan, research director from Consumer Watchdog, went further, saying, “The California rate scandal shows that insurers cannot be trusted with a hand calculator, much less the language of health regulation.”

Imperial, CA - As Imperial County struggles with major unemployment, many drivers have failed to take advantage of a program that could help them. So far this year, only two motorists in Imperial County has qualkified for the state's Low Cost Auto Insurance program, an affordable way to comply with the law.

Carmen Balber of Consumer Watchdog, which opposes the Senate version, disagreed with the industry’s interpretation. “The scope of pre-emption is much broader in the Senate bill than the insurance industry would like you to believe,” she said. The Senate version, she said, allows the Treasury Department to write new rules that could pre-empt state laws, while the House bill limits Treasury’s authority to recognize foreign laws. To support the Senate bill, Balber said, is to support “a move to weaken the strongest state regulations.”

Mercury "got taken for a ride" by political consultants, said Jamie Court, president and chairman of Consumer Watchdog and a board member of its CCR affiliate. Prop 17, which lost by a 4% margin, was never going to pass, he said.

Voters had to work hard to sift through the "obfuscation" and "deception" employed by PG&E and Mercury Insurance, said Doug Heller, executive director of Consumer Watchdog, whose political action committee ran the opposition campaign to Prop. 17. "They had to resist an all-out attack by special interests," Heller said, "and they managed to go to the newspapers and blogs and editorial boards and pick through the rubbish."

Proponents failed in their attempt “to scam California drivers by authorizing surcharges that voters made illegal in 1988 when they passed Proposition 103,” said Harvey Rosenfield, founder of Consumer Watchdog and author of the ballot measure that has regulated car insurance rates for 22 years. “This is a victory not just for motorists in California, but a broader victory for California voters, who have made it clear they don’t intend to let insurance companies or utility companies or other big corporations subvert the people’s initiative process,” Rosenfield said.

Proposition 17, auto insurance measure, appeared to be headed for defeat. With 99. 1 percent of the precincts reporting, it was losing by 158,000 votes, or 52-48 percent.

Voters rejected two business-backed measures that would have changed the electric power and auto insurance industries in California. Harvey Rosenfield, the noted consumer advocate who led the fight against the proposition, was scheduled to make a statement later. Existing law lets insurers offer loyalty (or “persistency”) discounts to long-term customers. Mercury has been fighting for years for the right to extend the discounts to other insurers’ long-term customers in an effort to lure them away. Rosenfield says that because of the “zero sum” regulations governing insurance premiums in California, companies that give discounts to one group have to raise premiums on others. He said newly insured motorists, or those who’d let their insurance expire temporarily, would pay big surcharges as a result.

The outcome was a victory for consumer groups that argued the referendum would effectively legalize surcharges outlawed since the passage of Proposition 103 in 1988. Because those with lapses in coverage or payments would be disqualified from discounts, the initiative would allow insurers to charge those customers more, they argued.

Two other initiatives put on the ballot by major corporations — Proposition 16 requiring voter approval before cities can get into the electricity business, and Proposition 17 giving auto insurance companies more leeway in setting rates — were rejected by voters. Jamie Court, president of Consumer Watchdog, said he was heartened that those propositions were so close despite tens of millions spent by companies that would benefit. "I think it says the electorate isn't as stupid as the corporations think it is," Court said.

California voters rejected the two initiatives put on Tuesday's ballot by major corporations -- Proposition 16, requiring voter approval before cities can get into the electricity business, and Proposition 17, giving auto insurance companies more leeway in setting rates.

Consumer Watchdog founder Harvey Rosenfield wrote and lobbied for Proposition 103 in 1988. With its passage, the state regulated auto and homeowners' insurance and challenged rate hikes, he said. "In California, five companies control 96 percent of the health insurance market. It's almost a cartel," he said. "After a decade's worth of double-digit increases, and you get them again in a recession, there's just no more money to pay the price."

A leading consumer advocate charged Prop. 17’s chief sponsor, Mercury Insurance, of fraudulently suggesting in recent mailers that the Consumer Coalition of California backs the measure. That coalition is “run by a Texas woman, Virginia Jarrow, who has repeatedly sided with industry,” said Harvey Rosenfield, founder of Consumer Watchdog, who also said Mercury failed to identify itself as an insurance firm in mailers as mandated by law.

“Insurers are spending millions of dollars to influence the outcome of Tuesday’s election, but most voters don’t know insurance companies are out there propping up initiatives and attacking candidates,” said Doug Heller, executive director of Consumer Watchdog, which is virtually single-handedly taking on Mercury Insurance Corp.’s Proposition 17. Mercury has outraised Consumer Watchdog’s PAC $15.9 million to $1 million."

Prop. 17 is another special-interest offering. I’m inclined to agree with opponent Harvey Rosenfield, founder of Consumer Watchdog, who says: “When was the last time an insurance company spent $13 million to save you money? The answer is never.”

 

Those opposed to Prop. 17, including groups like Consumer Watchdog, project that the surcharges will leave more motorists, especially low-income residents, driving on the road uninsured. No $250 courtesy discount can compensate for that. The measure is a metaphorical lemon with a flat tire on ballots next week.

Mercury is the culprit, according to No on Prop. 17 campaigners, led by the Santa Monica-based Consumer Watchdog. Its director, Doug Heller, says that it’s rarely mentioned that Prop. 17 would give Mercury and other insurers free will to hand down hefty $1,000 surcharges to drivers — four times the savings touted by Prop. 17 supporters.