The Chief Administrative Law Judge (CALJ) of the California Department of Insurance has ruled that the agency’s handling of certain procedures under Proposition 103 does not align with the law’s intended protections for consumers.
The decision has sparked a response from insurance companies and a department attorney urging Insurance Commissioner Ricardo Lara to overturn portions of the rulings.
In her decision, CALJ Kristin I Rosi highlighted that settlements between the Department of Insurance, insurers, and consumer groups must be reviewed by judges in the Administrative Hearing Bureau, an independent judicial unit within the agency.
Rosi emphasized that this process is a key part of Proposition 103’s framework, designed to ensure public oversight and fairness in rate-setting decisions.
"When the parties ignore settlement regulations meant to provide specific oversight, California consumers are once again left without assurances that the implemented rate is fundamentally fair and reasonable,” she wrote.
Rosi said that it also allows insurers and the department to limit consumer group participation in settlements, contrary to Proposition 103’s goals of promoting transparency and public involvement.
Consumer Watchdog, a nonprofit organization advocating for consumer rights under Proposition 103, has urged Lara to uphold the Rosi’s rulings.
Harvey Rosenfield (pictured above), the group’s founder and the author of Proposition 103, stated that neutral administrative law judges are essential to maintaining fairness and preventing political interference in the rate-setting process.
Consumer Watchdog has cited its record of using Proposition 103’s public participation rights to challenge rate requests and claims to have saved California consumers over $6 billion since 2003.
Rosi’s rulings were made in the context of compensation requests from the group, which the judge determined had made substantial contributions to the outcomes in seven separate rate challenges.
Two major insurers, State Farm and Allstate, whose previous rate increases were among those reviewed in Rosi’s rulings, have joined an agency attorney and four industry lobbying groups in calling for Lara to reverse the decisions.
These rulings require that agreements on rate changes involving the department, insurers, and consumer representatives be presented for review by independent administrative judges.
The rulings coincide with broader regulatory proposals from Lara that aim to reform aspects of Proposition 103. These proposals, supported by segments of the insurance industry, include changes that critics argue could lead to significant rate increases for home, renter, auto, and small business insurance.
Lara has also proposed changes that could reduce procedural protections, such as the requirement for public scrutiny of rate filings and the ability for consumers to challenge rate increases.
Consumer Watchdog has expressed concerns over legislative efforts that could allow the Insurance Commissioner to appoint the CALJ. A provision in a 2023 bill supported by the insurance lobby would have granted Lara that authority, but the proposal was not considered by lawmakers.
What are your thoughts on this story? Please feel free to share your comments below.
