The advocacy group Consumer Watchdog is calling on California's attorney general to investigate some insurance companies in the state, saying the companies are colluding to raise rates for homeowners in California.
Consumer Watchdog president Jamie Court said the proof is in a recording he made last week during a flight between Sacramento and Los Angeles.
Court recorded part of a conversation between a flight attendant and Michael Gunning, chief strategy officer for Lighthouse Public Affairs — a group that lobbies for insurance companies.
The recording includes Gunning saying, “So, we’re trying to jam a bill in the last three weeks of the year.”
Consumer Watchdog says the insurance industry has been working on "backroom negotiations... over an insurer bailout and deregulation plan" in the state legislature. The group has joined other public interest organizations in a letter to Gov. Gavin Newsom and legislative leaders, saying, "A plan to bail out the insurance industry and make Californians pay demands a thorough public debate, but the details of this proposal have yet to be seen in public."
The letter includes a link to Court's recording, but he said there was more that he did not capture.
“I heard other things that were actually more incendiary before I started taping," Court said. "He (Gunning) said, 'Oh it’s the end of session. I get paid for these last minute surprises.' I didn’t get that on tape, but what I did get on tape was him saying, 'So State Farm is not writing any new, Allstate stopped a while ago, Farmers said they were limited to 12,000 policies a year.'”
In fact, as KPBS has been reporting for months now, several insurance companies have stopped selling new homeowner policies in California, while others have placed restrictions on the policies they sell. The companies have cited the high cost of insuring homeowners who live in areas prone to wildfire. Real estate agents have said the difficulties in getting insurance have made home sales more difficult.
“This was all to surprise the public and surprise the lawmakers and do a last minute job and he invoked the idea that these companies were pulling out in sequence as a way of pressuring the deal," said Court.
In a request to state Attorney General Rob Bonta for an investigation, Consumer Watchdog said insurance companies and their lobbyists are illegally colluding to coordinate an exit from the state. If true, such collusion would violate state and federal antitrust laws.
"So, we believe that constitutes price fixing. If a company is pulling out of a market that they’re profiting well in, and they’re doing it in concert with other companies to jack up premiums, isn’t that price fixing?” Court asked.
We reached out to Michael Gunning and Lighthouse Public Affairs. A partner in the firm provided this statement:
"The housing crisis is an issue that effects everyone. The situation has intensified with the challenge of securing insurance for homes, affecting both homeowners and home builders.
"The urgency is undeniable - Californians deserve solutions that address these issues. Our team works tirelessly — even answering questions from flight attendants about what we do — advocating for our clients and communities."Patrick Harbison, Partner, Lighthouse Public Affairs
Attorney General Rob Bonta’s office said they’re aware of Consumer Watchdog’s request, but they said they were unable to comment on it.
