LOS
ANGELES, Oct. 2, 2024 /PRNewswire/ -- Consumer
Watchdog said today's amendments to Insurance Commissioner
Ricardo Lara's regulations that let
insurance companies hike rates based on secret algorithms related
to climate models still do not expand coverage for policyholders
who have been non-renewed. The draft rules also fail to address
concerns that the regulation does not require transparency or
accountability for these models that will raise insurance rates for
all Californians.
The new draft does not close loopholes that allow all insurance
companies to say they will increase coverage in fire areas by just
5%, not the 85% coverage Insurance Commissioner Lara has repeatedly
promised. It also continues to allow insurers to move the goalposts
if they can't meet either standard.
Today's amendments also ignored testimony by consumer advocates
in public workshops concerned with the secrecy of the "PRID" model
process, lack of minimum disclosures or any technical standards for
models, and the lack of accountability for how algorithms will
impact rates. Instead, the draft creates new barriers that would
further limit public participation in the PRID process.
"Commissioner Lara could have fixed his rule to make insurance
companies meet their commitments, to spell out the penalties
companies would face if they fail, or to mandate transparency for
models. But today's amendments just continue the lie. This
regulation still doesn't get people insured or make the secret
algorithms insurance companies will be allowed to use to raise
rates publicly accountable," said Carmen
Balber, executive director of Consumer Watchdog.
Consumer Watchdog and other public interest organizations raised
these and other concerns that the Commissioner did not address in
comments at the California Department of Insurance public
hearing about the regulation last month.
In comments submitted September 17,
2024, Consumer Watchdog took issue with other loopholes in
the regulation that would free insurance companies from returning
to areas of the state they have abandoned:
- Insurance companies won't have to sell comprehensive coverage.
They may offer a bare-bones policy equivalent to what consumers get
today on the FAIR Plan.
- Rate hikes start on Day 1, but insurers won't report progress
toward commitments for two years – until at least 2027.
- After two years, an insurer may put off meeting a commitment
indefinitely, as long as it claims to be making a "reasonable
effort."
- There are no penalties if a company fails and no timelines for
completion.
The Commissioner has also falsely claimed the regulation will
provide robust public review of the black box models he will allow
insurance companies to use to raise rates. In fact, the
regulation:
- Creates a process designed to keep models and their algorithms
private, violating Prop 103's public disclosure requirements.
- Does not require wildfire models be proven reliable,
predictable and unbiased.
- Contains no guidelines for minimum information to be made
public; required disclosures will be different for every
model.
- Actively discourages public participation and expert review of
models.
- Makes the whole process voluntary, and any model currently in
use is exempted from a PRID entirely for up to four years.
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SOURCE Consumer Watchdog