How California's insurance chief is quieting consumers to boost industry profits

California's insurance commissioner, Ricardo Lara, has decided that giving consumers a voice in the regulation of insurance companies is just too much accountability for himself and the industry he regulates. After years of policy disagreements with consumer groups, Lara is now trying to cancel a voter-approved system that enables Californians to independently watchdog compliance with Proposition 103.

To protect their profits, insurance companies deploy an army of lawyers, lobbyists, and experts--just ask anyone whose home burned in the LA wildfires what it's like trying to get their insurer to pay a claim. Policyholders ultimately foot the bill for the industry's vast legal apparatus. When Californians passed Proposition 103, they knew that insurers would aggressively resist its reforms, which include regulation of rates and a bar on discriminatory practices that were previously commonplace. They sought to redress the imbalance of power between the industry and consumers by enabling the public to challenge an insurer or the commissioner in any administrative or judicial forum and, crucially, by requiring insurance companies to pay consumer advocates their reasonable legal fees and expenses when they make a "substantial contribution" to the outcome of the challenge. (Ins. Code § 1861.10.)

Consumer Watchdog has invoked this process to defend Proposition 103 against industry lawsuits, of which there have been hundreds since the initiative's passage; enforce Proposition 103's protections against profiteering and discrimination; provide expert testimony on complex regulatory matters before the California Department of Insurance; and block over $6 billion in unjustified rate increases since 2003. For every $100 the non-profit organization has saved people on their residential, auto, and small business premiums, the cost to policyholders of compensating Consumer Watchdog's advocates in rate proceedings has averaged 25 cents.

No other state in the nation offers its citizens this ability to participate directly in the government's regulation of insurance, and the industry has constantly sought to undermine it. Commissioner Lara's response to California's current insurance crisis has only emphasized its importance.

Insurance companies have seized on climate change as an excuse to argue they can no longer comply with Proposition 103's consumer protections. To press their point, they have sought massive rate increases and abandoned homeowners in neighborhoods across the state. Their demands: diminish scrutiny of insurers' applications for higher rates; allow them to use secret, potentially biased software algorithms to set premiums; permit the companies to pass through unregulated expenses to their customers; and, finally, terminate the public participation process. Do all this, the industry threatened, or face even more chaos in the insurance marketplace.

Lara capitulated (with the backing of Gov. Newsom), and in 2024 began rewriting long-standing regulations. Consumer Watchdog intervened in each rulemaking proceeding, thoroughly critiqued each proposal (many of which were poorly drafted), and urged specific changes to protect consumers. The commissioner ignored our input.

In 2023, Lara promised that once the public paid the insurers' ransom, his new rules would require them to resume selling insurance in areas they'd abandoned. But, as Consumer Watchdog explained, that quid pro quo was riddled with loopholes that incentivized companies to dump policyholders. By the time Lara's promise took effect in 2025, 300,000 more policyholders had been forced to buy high-priced, low coverage policies from the FAIR Plan, California's "insurer of last resort." So insurance companies got the deregulation and price increases they extorted, but for "$341 million in combined annual hikes, the state would gain 8,111 policies over three years," the LA Times calculated.

Lara delivered his final gift to the industry three months ago: a plan to demolish the public participation process. His proposal allows him to retroactively deny compensation for consumer advocacy if he claims the advocacy is "vexatious," "duplicative," "cumulative," "peripheral," "oppositional" or merely "irrelevant," or if he says that the intervenor has an "ideological agenda." It caps the number of lawyers for whom a consumer advocacy group can be compensated to two, while placing no limits on the number an insurance company can hire at policyholder expense. It eliminates the ability of independent Administrative Law Judges to oversee most rate matters and transfers consumer compensation requests from them to himself--a Trump-style power grab that completes a coup Lara began with the abrupt removal of the agency's chief judge last winter.

Lara insists that his Department of Insurance employees adequately protect consumers; the statistics disagree. When there was no consumer oversight, Lara approved an average of 95% of the increase requested by home insurers from January 2022 to April 2025, and 89% of the increase requested by auto insurers. But when Consumer Watchdog participated, the percentage of the rate increase approved in homeowner insurance cases dropped to 75%. In auto insurance cases, it was 65%.

Indeed, his staff has dutifully implemented Lara's pro-industry policies. In February of this year, agency lawyers signed off on an "emergency" $1 billion financial bailout for State Farm without even requiring the company to justify it at a public hearing--a violation of Prop. 103. After Consumer Watchdog objected, Lara belatedly ordered a hearing but approved an "interim" rate increase of $749 million in the meantime. Consumer Watchdog is currently fighting a team of State Farm lawyers (and the Commissioner) in an administrative court to force the company to either prove it's entitled to that handout or refund the money.

Lara has made little effort to hide his scorn for Proposition 103, or that his amendments to the current rules governing public participation target Consumer Watchdog, his most persistent critic and the insurance industry's nemesis. As one columnist concluded: "Mainly, this is an effort to squelch or silence Consumer Watchdog.... That nonprofit is the preeminent intervenor in insurance rate proceedings."

The Consumer Federation of California Education Foundation--another intervenor--and dozens of other organizations have urged Lara to withdraw his plan, which in its present form unequivocally conflicts with Proposition 103's text and purposes. It also flouts a fundamental norm: that of equal justice under law. As the Consumer Attorneys of California points out in a letter to Lara, his draft regulation "can be read to suggest that strenuous advocacy on behalf of consumers is unwelcome and improper. It is a singular principle of American law that the best way to determine truth is through the competition of opposing arguments." Lara's proposal would silence consumers, denying Californians the representation to which they are entitled and weighting the scales of justice in favor of the insurance companies.