California Insurance commissioner Ricardo Lara has partially vacated an administrative law judge’s decision that criticized the state insurance regulator’s rate approval practices, according to a report from AM Best.
The move follows objections raised by the California Department of Insurance (CDI) and addresses ongoing disputes over the state’s rate-setting framework.
The decision stems from a case brought by Consumer Watchdog, which sought compensation for its involvement in challenging rate filings.
In the original ruling, the administrative law judge claimed that CDI employed a rate approval process not codified by state law or regulations. The ruling also suggested that any settlements or stipulations from rate proceedings required judicial approval.
AM Best reported that Lara, in overturning portions of the ruling, cited a filing from the CDI's Rate Enforcement Bureau. The filing argued that the judge’s decision contained erroneous legal interpretations, diverged from published guidance by the department, and included improper advisory opinions regarding Proposition 103.
The CDI clarified that Lara’s actions did not constitute an “overturning” of the judge’s order but reflected his role as the final authority in compensation requests.
According to the department, the commissioner’s decision ensures overdue payments to Consumer Watchdog while removing commentary deemed inconsistent with legal standards and established practices.
Consumer Watchdog has been a central figure in the dispute. In a Nov. 15 statement, the group stated it had long opposed the practices criticized in the judge’s decision. However, the CDI pointed to earlier statements by the organization asserting that administrative hearing boards lacked the authority to revisit or overturn automobile insurance rate applications.
The CDI stated that additional rulings would be issued in 2025 to provide clarity on the matter. In the meantime, the department plans to continue its current regulatory practices.
Separately, Lara recently finalized regulations allowing insurers to use forward-looking wildfire catastrophe models. In exchange, insurers must commit to covering more properties in areas at higher risk for wildfires.
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