Consumer Watchdog Saves Californians $5.5 Billion in Insurance Overcharges

The nonprofit was founded by the author of Prop 103, a state law that subjects insurance companies to public scrutiny.

The law empowers consumers to independently contest unwarranted rate hikes and other illegal insurance practices. Image via Shutterstock.

Consumer Watchdog has successfully blocked more than $5.5 billion in insurance overcharges in California over the past two decades, according to the findings of a recent study.

Consumer Watchdog, a nonprofit citizen organization, has leveraged Prop 103---a voter-approved law that subjects insurance companies to public scrutiny---to challenge and prevent $3.16 billion in auto insurance overcharges, $2.25 billion in unjustified homeowners insurance increases, and $99 million in higher premiums for health care providers and small businesses between 2002 and 2023. The law empowers consumers to independently contest unwarranted rate hikes and other illegal insurance practices.

The organization's oversight has not only resulted in substantial savings for policyholders, but has also ensured insurance companies reimburse its experts and attorneys a total of $11.6 million, which translates to less than 25 cents for every $100 saved for consumers.

Recent challenges by Consumer Watchdog to proposed rate increases by major insurance companies like State Farm, Allstate, Pacific Specialty and GEICO have led to a combined savings of $885 million in just November and December 2023. These efforts come at a time when the insurance industry is seeking billions in new rate increases and pushing for the weakening of consumer protection rules.

"Consumer Watchdog has blocked insurance companies from overcharging homeowners, renters, drivers and health care providers by $5.5 billion over the last 21 years," said Carmen Balber, executive director of Consumer Watchdog. "No wonder lobbyists for the insurance industry are working day and night to derail this crucial consumer protection tool."

"The voters understood that the industry and its allies would do everything they could to undercut the protections of Prop 103, so they gave themselves the independent authority to monitor and enforce the law in all matters before the Department of Insurance and the courts," said Harvey Rosenfield, author of Prop 103 and the founder of Consumer Watchdog. "The goal of the opponents of public scrutiny and participation is to allow insurance companies to overcharge Californians. Make no mistake: paying the insurance industry's ransom through unjustified premium hikes is not the way to address the shortages that the companies have created in the home and auto insurance markets."

The study further illustrates the impact of Consumer Watchdog's interventions, showing that when the organization challenges a rate increase, the approved rates average significantly lower than those unchallenged.

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