New Ballot Initiative Seeks to Repeal California's Landmark 1988 Insurance Law, Proposition 103

A new statewide ballot initiative, titled "The California Insurance Market Reform Act of 2026," was filed today, proposing a significant overhaul of the state's insurance regulatory framework. The initiative seeks to repeal Proposition 103, a landmark 1988 law that has governed California's property and casualty insurance market for nearly four decades. Key provisions of the proposed act include making the Insurance Commissioner an appointed position and eliminating the prior-approval rate setting process, alongside the repeal of compensated third-party intervenors.

Proposition 103, passed by voters in 1988 with 51% approval, established a system requiring insurance companies to obtain prior approval from an elected Insurance Commissioner before implementing rate changes. It also empowered consumer groups to intervene in rate-setting processes, often with legal costs reimbursed by insurers. Proponents of Prop 103, such as Consumer Watchdog, contend the law has saved California consumers billions in insurance premiums, with one report citing over $150 billion in auto insurance savings alone.

However, critics of Proposition 103, including independent insurance agent Elizabeth Hammack who submitted the new measure, argue the existing framework has contributed to significant dysfunction in California's insurance market. The state is currently grappling with an insurance crisis, marked by major insurers like State Farm and Allstate limiting or ceasing new policy sales, citing challenges such as escalating wildfire risks and regulations that hinder their ability to adjust rates quickly. The proposed act aims to streamline the regulatory process, allowing insurers more flexibility in rate setting and potentially encouraging more companies to operate in the state.

Consumer advocacy groups, including Consumer Watchdog, strongly oppose the repeal, asserting it would dismantle crucial protections and lead to "skyrocketing rates" for policyholders. California Insurance Commissioner Ricardo Lara's office has also expressed opposition to any efforts that would diminish consumer rights, emphasizing the importance of the current system's accountability. To qualify for the November 2026 ballot, proponents of "The California Insurance Market Reform Act of 2026" must gather over half a million signatures by April, an effort that experts describe as a significant challenge.