Consumer Watchdog Challenges Commissioner Lara’s Insurance Proposal

Insurance Commissioner Ricardo Lara faces significant opposition following a proposal that critics argue would undermine public participation in the insurance rate-making process. During a hearing on November 20, 2025, representatives from Consumer Watchdog and thirty-six additional public interest organizations urged Lara to withdraw his draft regulation, warning that it could limit consumers’ ability to challenge unjustified rate increases effectively.

The proposed changes to the regulations governing consumer advocacy would grant Lara unprecedented powers, including the ability to deny compensation to consumers who oppose his decisions. According to Consumer Watchdog, this shift could make it financially unfeasible for advocates to challenge rate proposals, a crucial process established by Proposition 103. Since its implementation, this initiative has enabled advocates to save Californians over $6 billion in insurance costs, at a cost of just 25 cents per $100 saved.

At present, Consumer Watchdog is contesting a request from State Farm for a $1.2 billion rate increase necessary to maintain its operations in California. Lara has already approved a conditional “emergency” rate hike of $749 million, raising concerns about escalating premiums for California residents. “If Commissioner Lara’s plan goes into effect, no consumer group will be able to afford to challenge insurance companies – or the commissioner – when they propose excessive or unfair rates,” said Will Pletcher, Litigation Director at Consumer Watchdog.

Implications of Proposed Changes

The essence of Proposition 103 allows consumers to enforce their rights in regulatory proceedings and in court. It mandates that insurance companies compensate consumer representatives for their advocacy efforts. Lara’s proposal introduces several contentious provisions that could significantly hinder this process. Critics point out that the commissioner would have the authority to retroactively deny compensation by applying arbitrary standards, labelling efforts as “vexatious” or “irrelevant.”

Additionally, the proposal would enable Lara to cap the number of advocates for which compensation is available, while imposing no similar limits on the resources that insurance companies can deploy. This disparity raises concerns about the fairness of the insurance rate-setting process, particularly as consumers may find themselves outmatched by well-funded insurance lobbyists.

Consumer advocates argue that these proposed regulations could politicize the rate-making process, undermining the role of independent Administrative Law Judges. The proposed measures would restrict judges’ ability to review settlements and decide compensation requests, making it easier for insurance companies to delay hearings on rate challenges.

Broad Coalition Opposes Lara’s Proposal

A coalition comprising thirty-six organizations, including the Dolores Huerta Foundation and the California Federation of Teachers, submitted a letter to Commissioner Lara, outlining their concerns. They assert that the proposed changes would weaken consumer representation and harm policyholders who rely on fair insurance practices.

Consumer Watchdog’s staff attorney, Ben Powell, emphasized the potential implications, stating, “If consumers disagree with the commissioner, they are ‘oppositional’; if they agree, they are ‘duplicative.’ Either way, they don’t get compensated.” The group maintains that Lara’s approach constitutes an unlawful expansion of power that contravenes both Proposition 103 and the First Amendment rights of consumers.

The backdrop to this controversy includes Lara’s broader “Sustainable Insurance Strategy,” which critics argue has leaned towards deregulation and higher rates at the expense of consumer protections. This strategy has coincided with rising insurance premiums and a surge in enrollment in the California FAIR Plan, which offers coverage to individuals unable to secure insurance in the general market.

In conclusion, Consumer Watchdog and allied organizations are calling for a reevaluation of the proposed regulations, advocating for measures that would enhance transparency and public engagement in the insurance rate-setting process. The ongoing debate underscores the critical importance of consumer advocacy in safeguarding fair practices within California’s insurance landscape.