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Information Sheet: Proposition 103 Intervenor Process

Proposition 103 requires "prior approval" of automobile, homeowners and casualty insurance rates.

Proposition 103, passed by California voters in November 1988, requires the "prior approval" of California's Department of Insurance before insurance companies can implement property and casualty insurance rates. The ballot measure also required each insurer to "roll back" its rates 20 percent. Prior to Proposition 103, automobile, property and casualty insurance rates were set by insurance companies without approval by the Insurance Commissioner.

Public notices of insurance company rate filings are posted at the end of every business week on this website. Interested parties can also subscribe to receive public notice updates via e-mail.

Rate filings are available for viewing from this web site. Rate filings are also available for public viewing at the California Department of Insurance's offices. Please call San Francisco (415) 538-4300 or Los Angeles (213) 346-6707 in advance to schedule appointments to view filings.

About the Proposition 103 Intervention Process

Proposition 103 authorized a process for consumer participation in the administrative process for setting insurance rates, and permitted consumer "intervenors" to recover advocacy and witness fees and expenses under certain circumstances.

Under the law, consumers that provide a substantial contribution to a rate decision by providing valuable technical input may recover their costs and expenses as well as reasonable attorney's fees. Unlike the dollars paid to insurers' attorneys and experts, the payments made to consumers who participate in the rate-setting process are subjected to scrutiny and only reasonable costs and fees may be reimbursed.

The success of Proposition 103 in stabilizing and reducing insurance rates is attributable in no small part to consumer participation. The Department repeatedly found that consumers made a "substantial contribution" to the decision making, bringing to the Department's attention issues it might not otherwise have considered and enabling the Department to reach the best decision possible for consumers.

Types of insurance regulated by Proposition 103

The following lines of insurance are regulated by Proposition 103: Personal automobile, dwelling fire, earthquake, homeowners, inland marine, and umbrella; Commercial aircraft, automobile, boiler and machinery, burglary and theft, business owners, earthquake, farm owners, some fidelity, fire, glass, inland marine, medical malpractice, miscellaneous, multi-peril, other liability, professional liability, special multi-peril, umbrella, and coverage under the United States Longshoremen's & Harbor Workers' Compensation Act.

Proposition 103 has saved consumers billions

A November 2013 report by the Consumer Federation of America found that more than $100 billion has been saved by California drivers 25 years after the passage of Proposition 13 - a $4.29 billion per year dividend. The report further found that Californians spent 0.3% less on auto insurance in 2010 than they spent in 1989, while the nation spent 43.3% more. (Source: What Works: A Review of Auto Insurance Rate Regulation in America and How Best Practices Save Billions of Dollars)

An earlier 2008 report by the Consumer Federation of America, looking solely at automobile insurance rates before and after Proposition 103, found that consumers realized $61.8 billion in savings as a result of the reforms enacted by Proposition 103. (Source: State Automobile Insurance Regulation: A National Quality Assessment and In-Depth Review of California's Uniquely Effective Regulatory System)

One group reported that for every $100 saved for consumers, insurance companies paid only 25 cents in intervenor costs. Using the group's numbers, the costs of intervention is only .002% of the dollars saved for consumers. (Source: Intervenor System Has Worked To Save California Insurance Customers $2 Billion Since 2003)

A new intervenor, the Consumer Federation of California, reported in fall 2014 that "[a]s a result of CFC's intervention, consumers have saved $148 million in the past 12 months." In the group's spring 2014 newsletter, CFC wrote that that "a proposed $72 million rate hike by Farmers was trimmed by $34 million, saving 1.2 million homeowners an average of $28 this year…we anticipate that the insurance companies will pay intervenor fees of one penny for every $10 saved. (Source: Consumer Federation of California)

Courts value consumer "intervenors"

The courts have made clear the importance of consumer intervention and the value consumer groups add to the rate making process.

For example, in Economic Empowerment Foundation v. Quackenbush, 57 Cal. App. 4th 677, 686 (1997), the California Court of Appeal explained that "[t]he purpose of intervener fees is evidently to encourage consumers to participate in insurance rate proceedings by compensating them for their contribution" (emphasis added). The court quoted the California Supreme Court's decision in Calfarm Ins. Co. v. Deukmejian, 48 Cal. 3d 805, 836 (1989), for the proposition that in enacting Proposition 103 voters "favored a measure that provides for public regulatory hearings with consumer participation" (emphasis added).

"Thus, we should seek an interpretation of the statute which best facilitates compensation." Economic Empowerment Foundation, 57 Cal. App. 4th at 686. The court relied on analyses of consumer intervention in California Public Utilities Commission rate proceedings, as discussed in the California Supreme Court's decision in Consumers Lobby Against Monopolies v. Public Utilities Comm'n, 25 Cal. 3d 891, 911 (1979). Relying on Consumers Lobby, Economic Empowerment Foundation, 57 Cal. App. 4th at 686 n.6, the California Court of Appeal explained:

Public interest groups make "special contributions" to PUC proceedings.
They "speak for a substantial segment of the population that otherwise may go unheard."
"[C]ommission staff cannot fully and adequately represent all facets of the public interest, and in some instances . . . it may fail to discern the ratepayers' rights."
"Public interest interveners therefore fill a gap in the ratemaking process."
Consumer group participation therefore is to be "encouraged" and "commended."

Intervention in investigatory and regulatory hearings

Investigatory and regulatory hearings are also open to intervenors. Members of the public or organizations are welcome to observe, submit written comments and/or present live testimony. In order to be compensated one must submit written comments that make a substantial contribution within the time frame in the notice and may attend the hearing and request to be heard.

Proposed regulations are available from this web site.

Public Advisor

The Public Advisor monitors and assists participation by members of the public in the Department of Insurance's proceedings. You can e-mail Public Advisor Jamie Katz.