Members of Congress Call on Insurance Commissioner Lara to Protect Consumers

WASHINGTON, DC – Representatives John Garamendi (D-CA08) and Zoe Lofgren (D-CA18), and members of California’s congressional delegation sent a letter to California Insurance Commissioner Ricardo Lara (D-CA) urging him to use his power under state law to stabilize the insurance market and protect consumers.

The letter responds to Commissioner Lara’s recent announcements, including his proposed Sustainable Insurance Strategy, which could diminish the Insurance Commissioner’s regulatory power, as well as other proposals that could threaten the consumer protections established in Proposition 103 and in place since 1988.

Garamendi served as the state’s first elected Insurance Commissioner from 1991 to 1995 and again from 2003 until 2007 before his election as the 46^th Lieutenant Governor of California. Among other reforms, Proposition 103 (1988) established the office of the California Insurance Commissioner as a statewide elected official.

In addition to Representatives Garamendi and Lofgren, the letter was cosigned by Representatives Jared Huffman (D-CA02), Mike Thompson (D-CA04), Ami Bera (D-CA06), Doris Matsui (D-CA07), Josh Harder (D-CA09), Mark DeSaulnier (D-CA10), Barbara Lee (D-CA12), Eric Swalwell (D-CA14), Anna Eshoo (D-CA16), Ro Khanna (D-CA17), Jim Costa (D-CA21), Salud Carbajal (D-CA24), Raul Ruiz (D-CA25), Julia Brownley (D-CA26), Judy Chu (D-CA28), Tony Cárdenas (D-CA29),  Adam Schiff (D-CA30), Grace Napolitano (D-CA31), Pete Aguilar (D-CA33), Jimmy Gomez (D-CA34), Norma Torres (D-CA35), Ted Lieu (D-CA36), Sydney Kamlager-Dove (D-CA37), Linda Sánchez D-CA38), Mark Takano (D-CA39), Robert Garcia (D-CA42), Katie Porter (D-CA47), Mike Levin (D-CA49) Sara Jacobs (D-CA51), and Juan Vargas (D-CA52).

A copy of the signed letter is available here. The full text of the letter is below:

Dear Commissioner Lara:

We write regarding your recently announced Sustainable Insurance Strategy. In short, California’s present insurance market is in chaos. Across the state, major insurance companies are canceling policies, denying coverage, and dramatically raising insurance rates for homeowners and other consumers. Many of these consumers include those with federally-backed home loans from the Federal Housing Administration (FHA), the United States Department of Agriculture (USDA), or Veterans Affairs (VA).

We believe that, under Proposition 103 (1988), as California Insurance Commissioner, you have the power to stabilize the statewide insurance market. It would greatly benefit our constituents across California for you to use that power to immediately and quickly review the proposed rate increases under any new risk modeling to determine if they are necessary, adequate, and not excessive for consumers. We also believe it would be beneficial to use that power to require that the insurance industry provides adequate, affordable coverage in every part of the state.

Your recent announcements, including the proposed Sustainable Insurance Strategy, seem to suggest dramatic changes to the Commissioner’s regulatory power that may result in a diminution of the authority granted by California voters and your ability to create a stable insurance market in our state. Proposals such as using proprietary forward-predicting models, expediting rate reviews that limit public comment, allowing insurance companies to abandon certain regions of the state, and incorporating reinsurance costs into Californian rates could threaten the important consumer protections established in Proposition 103 and in place since 1988. We believe it is important to keep California consumer interests at the forefront of your decision-making process.

We bring our concerns to your attention in anticipation of a comprehensive and transparent process of rulemaking, public hearings, and public comment on any proposed changes to the regulatory powers of the Commissioner and process for approving any rate increases for policyholders. Such a public process is necessary for the protection of consumers against unchecked corporate interests, and we strongly believe that any precipitous action should be subject to public scrutiny.

We appreciate your attention to this critical matter.

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