In conclusion
The goal of the proposed ballot initiative is to overturn California’s home and vehicle insurance regulations, namely Prop. 103.
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By overturning a statute that voters passed nearly forty years ago, a proposed ballot measure would fundamentally alter California’s property insurance regulations.
Since 1988, the state has regulated home, auto, and other property and liability insurance under Proposition 103. It permits the public to protest rate hikes and mandates that insurance companies obtain permission from an elected insurance commissioner before raising premiums.
The idea would eliminate the majority of that, which experts say is unlikely. The public would no longer be permitted to interfere in rate filings, the commissioner would be chosen by the governor rather than elected, and the rate-approval procedure would be subject to more stringent restrictions beginning in 2027.
Elizabeth Hammack, the independent insurance agent who submitted the proposed proposal, stated in her letter that she has personally witnessed the chaos that Prop. 103 has caused in our state. CalMatters requested an interview with Hammack, but he did not immediately reply.
The American Property Casualty Insurance Association’s vice president, Denni Ritter, stated that the insurance trade association is examining the proposal and is not involved in its formulation.
The initiative effort would need to gather over half a million signatures by April in order to be eligible for the November 2026 ballot.
Insurance Commissioner Ricardo Lara Splanto’s efforts to stabilize the state’s insurance market may be hampered if the measure makes it onto the ballot for the next year and is accepted by voters. This is because insurers have been reluctant to offer new policies or renew existing ones due to the increased danger of wildfires.
While making some concessions to the insurance business, such as permitting them to employ catastrophe modeling and account for their reinsurance costs when determining their rates, Lara designed his approach to stay within the parameters of the present insurance legislation. The insurance department requests that insurers maintain or expand their coverage in regions deemed to be at high risk for wildfires in return. This year, the plan’s implementation got underway.
According to Molly Weedn, an external spokesman for the insurance department, Prop. 103 protects consumers the ability to hold all parties involved in the ratemaking process accountable. Lara is against any attempt to deny people the rights they are entitled to. If they gather the signatures, Weedn added, “Come back to us with that question regarding how the measure would affect Lara’s plan.”
The proposition does not appear to be a serious or well-funded effort, according to a statement from Consumer Watchdog, an advocacy organization based in Los Angeles whose founder drafted Prop. 103 primarily to address rising auto insurance premiums. Additionally, the group referenced a study that claimed California drivers had saved over $150 billion in auto insurance prices over the years thanks to Prop. 103, and another study that revealed consumers blame insurance firms for the increase in premiums.
The group’s executive director, Carmen Balber, told CalMatters, “We are certain that voters want more accountability from insurance companies.” According to her, if Prop. 103 were repealed, homeowners’ and vehicle insurance premiums would rise.
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Although Prop. 103 offers significant consumer protections, according to Amy Bach, executive director of the San Francisco-based consumer advocacy group United Policyholders, the intervenor process has led to approval delays, about which insurers have long complained, and political pressure, which has exacerbated California’s troubled insurance market.
Bach stated, “I don’t think the ballot measure has a high degree of success.” The rising premiums are not well received by the public.
“If you ask any homeowner in the state of California, are you happy with the current state of insurance?” questioned Karl Susman, owner of an insurance agency in Los Angeles. You are aware that the response will be negative. We will now have the opportunity to vote to alter it.
Prop. 103, according to another consumer advocacy group, has contributed to California’s house and vehicle insurance costs remaining below the national average.
“This initiative would institute the regulatory system used in states that have seen some of the most dramatic rate spikes around the country,” said Douglas Heller, director of insurance for the Consumer Federation of America, a research and advocacy organization based in Washington, D.C., which has spent decades studying state insurance markets.
California is not the only state dealing with an insurance issue, Heller continued, adding that eliminating insurance company oversight at this time would be equivalent to closing the fire department in the middle of a fire.
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CalMatters has further information.
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