A consumer advocacy group sued the California Department of Insurance on Monday over its decision to let insurance companies charge customers for catastrophic losses that overwhelm the state’s insurer of last resort.
What happened: Consumer Watchdog filed a lawsuit Monday alleging that Insurance Commissioner Ricardo Lara’s decision last summer to allow insurance companies that contribute to the FAIR Plan to pass through costs after a catastrophe — like the Los Angeles fires in January — violates the Administrative Procedure Act’s requirements for public input.
The suit, filed in Los Angeles Superior Court, also argues that the FAIR Plan doesn’t allow insurers to pass on costs to other ratepayers.
“It is palpably unfair to allow companies that for decades have privately enjoyed the profits of the FAIR Plan to now foist its losses onto their policyholders,” Consumer Watchdog staff attorney Ryan Mellino said in a statement.
