SACRAMENTO, Calif., Aug. 14, 2019 /PRNewswire/ -- A wildfire insurance bill sponsored by Insurance Commissioner Ricardo Lara stalled in the state Assembly today in the face of objections raised by the Department of Finance and Consumer Watchdog that the bill would expose taxpayers to unnecessary financial risks.
The state Department of Finance analysis said the legislation, SB 290 (Dodd), is not needed because the Governor already has broad emergency authority to purchase insurance or other financial instruments to hedge against the possibility of a costly wildfire season. The bill would have exempted the purchase of such insurance and financial products from the usual state oversight, including regulation by Commissioner Lara's own Department of Insurance and procurement rules at the Department of General Services.
"SB 290 went around the existing checks and balances with the promise that a consultation with the insurance commissioner would be enough to guarantee legitimacy. But we can't just take the insurance commissioner's word that companies will do the right thing. Insurance companies can't be trusted to deal any more fairly with taxpayers than they do with other policyholders without a public process of oversight," said Carmen Balber, executive director of Consumer Watchdog.
With Insurance Commissioner Lara's stamp of approval, SB 290 unanimously passed the Senate and a previous Assembly committee and was on the Assembly Appropriations Committee's consent calendar. After the Department of Finance and Consumer Watchdog exposed the bill's serious flaws it was pulled from the consent calendar, and the committee ultimately placed it on suspense at the hearing this morning.
Consumer Watchdog said taxpayers dodged a bullet but would have to remain vigilant to ensure the bill does not return.
"SB 290 managed to fly under the radar because the Insurance Commissioner lent the prestige of his office to the insurance industry's cause. The Department of Finance pulled back the curtain on this taxpayer giveaway to insurers and Wall Street. Yet, while the bill is stopped for now, the public will have to be on guard for an end-of-session scheme to try and put it back on the table," said Balber. "Shortcuts like SB 290's are only ever in the interests of insurers, not their customers."
Read Consumer Watchdog's letter opposing SB 290: https://consumerwatchdog.org/sites/default/files/2019-08/LtrDoddSB290.pdf
Read the Department of Finance analysis opposing SB 290: https://consumerwatchdog.org/sites/default/files/2019-08/SB-290.pdf
The Assembly Appropriations Committee analysis said the bill "is not based on an analysis of the necessity or benefit of reinsurance for the state," that it allows for the purchase of reinsurance "without robust reporting, analytical or oversight requirements," and that, "it is not necessary to grant continuous appropriation authority with minimal oversight for such expenditures."
Read the committee analysis: https://consumerwatchdog.org/sites/default/files/2019-08/Assembly%20Committee%20on%20Appropriations%208%3A13.pdf
In a closed-door speech to insurance industry lawyers two weeks ago, Lara said: "So, I want to thank you for being one of the first organizations to support SB 290 and look forward to continue to partner with you to ensure the bill moves forward to the Governor's desk and ultimately to obtain his signature. I'm ready to get creative, just like all of you have been for so many years, and now you have somebody that's receptive to that in the Department."
Watch the speech: https://www.youtube.com/watch?v=MsvBWrRcaGQ
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SOURCE Consumer Watchdog