The Documents obtained under the Public Records Act and Prop 103 reveal what Consumer Watchdog claims are details of the secret proposal, drafted in private discussions with insurance lobbyists. to bail out the insurance industry that Commissioner Lara and insurers unsuccessfully tried to jam through the Legislature during the final days of session. The language previews the plan that Lara announced a week later, under which he will issue new anti-consumer regulations that track the failed legislative proposal.

The documents reveal what Consumer Watchdog claims are two massive loopholes that make the deal Lara cut to deregulate the price of fire insurance in California, in return for a “commitment” from insurers to expand home insurance coverage in wildfire areas to 85% of their market share outside risky areas, a fraud.

– – Insurers would be allowed to meet their commitment by offering bare bones policies – the type of policy homeowners already have access to under the FAIR Plan.
– – The commissioner could waive the “85% commitment” to sell more home insurance in wildfire areas for any insurer that claims it cannot meet its commitment.

The records obtained are emails and bill language circulated by the commissioner’s chief deputy to the insurance industry’s top lobbyists and legislative staff in late August.

“These documents prove Commissioner Lara’s deal with the insurance industry is an outrageous fraud on the public that will make Californians pay vastly more for insurance but not get more people insured. Lara tried to jam the deal through the legislature, and when that failed repackaged it as a regulatory plan. He must explain to the public how he can support an agreement that eviscerates insurance oversight in California without getting a single new homeowner insurance,” said Harvey Rosenfield, author of insurance reform Proposition 103 and founder of Consumer Watchdog.

The documents also confirm that the proposal circulating in Sacramento in late-August and early-September would have forced homeowners and business owners to bail out insurers for billions in FAIR Plan liabilities.

The organization said that the only purported consumer benefit of Lara’s legislative and regulatory plans is a “commitment” by insurers to expand home insurance coverage in wildfire areas to 85% of their market share in the rest of the market. The actual language of the August bill proves that promise is false and will not expand insurance to homeowners struggling to find coverage.

Consumer Watchdog also claims the deal also illegally guts the consumer protections of Prop 103 that have saved Californians hundreds of billions of dollars, including the right of the public to independently scrutinize and challenge rate increases that are unjustified, another target of Lara’s September announcement.

They say the documents also confirmed that the legislation would have bailed out insurers for their FAIR Plan obligations, a proposal that was not part of Commissioner Lara’s September announcement presumably because the change must be done by legislation, not regulation.

A story published by MSN reports that the commissioner’s office in turn accused Consumer Watchdog of seeking to protect a regulatory system its founder crafted from which it has been paid nearly $9 million as an “intervenor” reviewing insurance rates that remain below market and have left many homeowners unable to obtain coverage.

“Consumer Watchdog’s latest cynical claims hide the truth that the group has earned millions of dollars signing off on rate increases – while denying the reality that insurance has become impossible for some Californians to find at any price,” Deputy Insurance Commissioner Michael Soller said in a statement.