Consumer Groups Slam Lara’s Proposal to Limit Rate Challenge Rights

Insurance Commissioner Ricardo Lara faced significant backlash during a hearing on November 20, 2025, regarding his proposed changes to the regulations governing consumer participation in insurance rate-making. Consumer advocacy group Consumer Watchdog and a coalition of thirty-six public interest organizations voiced their concerns, asserting that the new rules would undermine the public’s ability to challenge unjustified insurance rates established under Proposition 103.

Commissioner Lara’s draft regulation would grant him the authority to deny compensation to consumer advocates who work to contest excessive rates. This proposal has raised alarm among consumer rights groups, who argue that it would effectively silence opposition to unfair insurance practices, thereby jeopardizing the rights enshrined in Proposition 103. Will Pletcher, Litigation Director at Consumer Watchdog, emphasized the potential consequences, stating, “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.”

Proposed Changes and Their Implications

The changes outlined in Lara’s proposal seek to redefine how compensation is allocated to consumer representatives, known as “intervenors,” who play a crucial role in the regulatory process. Under current regulations, insurers are required to cover reasonable legal and expert fees for these advocates when they make a “substantial contribution” to a case. Lara’s new rules would allow him to retroactively deny such compensation on arbitrary grounds, including claims of “vexatious” or “irrelevant” advocacy.

Additionally, the proposal includes several controversial measures:
– It sets arbitrary limits on the number of advocates a consumer representative can hire while placing no restrictions on the resources available to insurance companies.
– It removes the authority of independent Administrative Law Judges to review settlements and decide on compensation for consumer advocates.
– It allows insurance firms to appeal unfavorable rulings mid-case, potentially delaying the process significantly.

Consumer Watchdog’s analysis indicates that these changes could lead to higher insurance premiums for Californians and weaken the regulatory framework designed to protect consumers. The organization has previously utilized its advocacy efforts to save Californians over $6 billion since 2002.

Coalition of Voices Against the Proposal

In addition to Consumer Watchdog, a broad coalition of organizations, including labor unions, environmental groups, and consumer rights activists, has urged Commissioner Lara to withdraw the proposal. Their letter outlines how the changes would harm policyholders and diminish robust consumer representation in the insurance rate-setting process.

The coalition includes prominent organizations such as the California Federation of Teachers, Consumer Federation of America, and the California Nurses Association. They argue that Lara’s approach is a significant departure from the principles of transparency and accountability that Proposition 103 was designed to uphold.

Lara’s proposal has drawn comparisons to previous attempts to limit consumer advocacy in insurance matters, notably during the tenure of former Commissioner Chuck Quackenbush, whose similar efforts discouraged public participation. Consumer Watchdog has urged Lara to enhance public engagement by making processes more transparent and accessible rather than restricting them.

As the debate continues, the future of consumer rights in insurance rate-making hangs in the balance, with advocates warning that the proposed regulations could set a dangerous precedent for how insurance practices are monitored and challenged in California.

The hearing highlighted the ongoing struggle between consumer advocates and regulatory authorities over the balance of power in the insurance industry, raising questions about the sustainability of fair practices in a rapidly changing economic landscape.