California Insurance Commissioner Ricardo Lara announced last week he would respond by Friday, December 6 to a legal ruling on how insurance rate increases are considered.
Lara
Lara agreed with the part of the ruling by Kristin L. Rossi, chief administrative law judge in California's Administrative Hearing Bureau, granting compensation to Consumer Watchdog for its work on six rate increase requests made between May 2023 and February 2024 by Allstate, State Farm, USAA and Pacific Specialty.
In the rate increase procedural matters, Lara's legal filing vacated Judge Rossi's ruling and announced that he would, by December 6, reissue an edit of the ruling to correct portions that have "improper advisory opinions regarding Proposition 103, conflict with longstanding Department policies and procedures, and contain erroneous legal interpretations."
In a fact sheet Lara issued along with his legal response, he stated that he would "resolve confusion" about the processes for rate increases, including whether an administrative law judge (ALJ) has to review agreements between DOI, insurers and any intervenors involved. The sheet continued to say that DOI would clarify matters "by pursuing regulations in 2025 and continuing to implement existing practices in the meantime."
The insurers requesting increases, DOI and Consumer Watchdog all opposed requiring an ALJ review, since they reached an agreement on rates.
Rossi's ruling may allow third parties to make civil claims against rate increases if they have not been reviewed by an ALJ. Speaking to Digital Insurance on November 20, days before Lara's decision, the previous insurance commissioner (from 2011 to 2019), Dave Jones, said, "Now that she's rendered that decision, it's up to the commissioner to decide whether to ratify that decision, modify it or send it back for further deliberations. He technically could only accept the part of the decision related to the compensation for Consumer Watchdog, and say that he's rejecting the rest of it, but she has set forth a very clear road map for any third party now to sue in civil court, to challenge any stipulated agreement between the department and insurance company and intervenor around a rate."
Jones is now director of the Climate Risk Initiative Center for Law, Energy & the Environment at the UC Berkeley School of Law.
