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Assembly Insurance Committee Approves Bills to Let Insurers Raise Homeowners' Rates By Skirting Price-Gouging Protections

Thu, 05/07/2020 - 17:47
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Insurance Industry Lobbyists Admit that Prop 103 Has Kept Insurance Rates Lower in California than in Other States

Wildfire

Sacramento, CA –  The Assembly Insurance Committee voted today to allow insurance companies to raise rates on homeowners and renters in violation of voter-approved Proposition 103.  The bills would force unjustified insurance rate hikes onhomeowners in the very communities devastated by wildfires that they purport to help, said Consumer Watchdog.

“These bills do nothing to require insurance companies to renew homeowners’ insurance policies at an affordable price, or to protect Californians’ homes from the devastation of wildfires. Insurance companies are trying to use climate change as an excuse to fulfill a decades-long wish to escape the regulation of insurance rates mandated by California voters,” said Harvey Rosenfield, author of insurance reform initiative Proposition 103 and founder of Consumer Watchdog.

The Committee approved AB 2167 authored by its chair, Orange County AssemblymemberTom Daly, and SB 292 by Los Angeles CountySenator Susan Rubio, to allow insurance companies to evade Prop 103’s rules that require insurance companies to justify their rates before they take effect.

At the hearing, lobbyists for the insurance industry complained that Proposition 103 had kept homeowner rates in California “17% below the national average,” an acknowledgment that the bills would allow insurers to impose rate increases that are not justified, said Consumer Watchdog. The insurance industry representatives promised that they would sell more insurance if they were allowed to charge whatever they wanted for it.

The bills would allow insurance companies to evade Proposition 103’s bans on price-gouging and discriminatory practices against communities. Under AB 2167 and SB 292, a new taxpayer-funded commission composed of political appointees and insurance executives will meet behind closed doors to determine how homeowner and renter insurance rates will be set.

The bills would also allow insurance companies to use secret “models,” developed by insurance companies, that purport to project future claims from wildfires. These black box models would be used by insurance companies to non-renew entire communities – without having to disclose how the models work or whether they are accurate.

Both bills are couched in the creation of “insurance market assistance plans” that would allegedly assist insurance companies in addressing climate change and wildfire issues. However, Proposition 103 already gives the Insurance Commissioner the authority to establish such plans, subject to Proposition 103’s protections.

Read Consumer Watchdog’s letters opposing AB 2167 and SB 292.

The California Department of Insurance, and organizations including UnitedPolicyholders and Consumer Federation of California, also opposed AB 2167.

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