A former administrative law judge for California's Department of Insurance says she was fired after objecting to how the agency handled settlements with insurers seeking rate hikes, and she's now suing the state's elected insurance commissioner over it. Kristin Rosi, who served as the department's chief administrative law judge, filed a lawsuit in Alameda County Superior Court in September accusing Commissioner Ricardo Lara of denying her authority to review insurers' rate-increase requests.
Rosi's complaint, detailed in the Los Angeles Times, alleges the department bypassed public hearings required under Proposition 103 and negotiated settlements with insurers seeking rate increases without first obtaining approval from an administrative law judge. She claims the practice violates the 1988 ballot measure, which authorizes the insurance commissioner to review auto, home and other rate increases and guarantees public hearings when those increases hit 7% or more. The law also prohibits premiums that are excessive, inadequate, unfairly discriminatory or otherwise in violation of the Insurance Code, a standard echoed in the statute's language that no rate may be approved or remain in effect under those conditions, according to California's Insurance Code.
According to the Times, the department had a longstanding practice of negotiating settlements with insurers seeking rate hikes without Rosi's involvement. Her lawsuit accuses Lara and the department of whistleblower retaliation, sex discrimination and infliction of emotional distress, and seeks damages. Rosi was appointed an administrative law judge in 2007, was placed on leave in January 2025, and was fired later that year, per the Times account.
A Ruling Over a State Farm Rate Fight
The dispute traces back to October 2024, when Rosi found that the department, an insurer and an advocacy group had improperly negotiated a settlement in private, and that the rate-hike request should have been the subject of a public hearing, according to the San Diego Union-Tribune. The case involved a State Farm application seeking a 28.1% rate increase, and Rosi upheld a $175,000 payment to Consumer Watchdog for its role in lowering that requested hike, the newspaper reported. The following month, Lara struck down part of Rosi's ruling, saying her finding conflicted with longstanding departmental policies, according to E&E News.
The Union-Tribune reported in March 2025 that the Department of Insurance, which regulates roughly $300 billion worth of insurance policies issued statewide each year, confirmed Rosi had been placed on leave but declined to explain why. Her departure, the paper noted, left the independent bureau with just one judge on staff. Her attorney, Wendy Musell, said Rosi was fired after raising concerns that the law must be followed, and that the insurance disputes at issue involved both auto and home insurers, per the Times.
Industry Pushback and a Disputed Legal Reading
Rex Frazier, a former department regulator who now serves as president of the Personal Insurance Federation of California, disputed Rosi's claim that a rate increase automatically triggers a public hearing, and said she had attempted to exercise unprecedented powers, according to the Times. Spokespeople for Lara and the department declined to comment, the Times reported.
Consumer Watchdog, founded by Proposition 103 author Harvey Rosenfield, has been the leading intervenor in the department's rate reviews, and the group has received more than $15 million in intervenor fees while claiming it has saved consumers more than $7 billion in unwarranted premium increases, per the Times. Proposition 103 provides an intervenor process allowing consumer advocates to participate in rate reviews and receive compensation for expenses. Rosenfield said Consumer Watchdog has objected to the department's failure to hold hearings since it began filing intervenor requests more than two decades ago, and said he expected all rate challenges to undergo hearings overseen by administrative law judges regardless of the size of the increase, the Times reported.
Travel Expenses Cited in the Lawsuit
Rosi's lawsuit also cites press accounts alleging Lara used public funds for more than 46 trips to destinations including Paris, Bogota, Singapore, Glasgow, Dubai, London and Chile, and alleges he spent lavishly on five-star hotels and expensive restaurants without properly identifying a business purpose, according to the Times. The suit notes that the National Association of Insurance Commissioners, an industry-funded trade organization, paid for Lara's first- and business-class travel, including an $11,626 ticket for a 2024 Singapore conference on Asian insurance issues. Lara also spoke at a Climate Resilience for All event at the Sofitel hotel in New York City in September 2025, per the Times account. Lara is leaving office in January after eight years as commissioner.
A Market Already Under Pressure
The fight over who controls rate reviews unfolds against a California insurance market that's been battered for years. California auto insurance rates have risen more than 30% since 2022, driven by pricier vehicles, complex repairs and new safety requirements, while home insurance rates have climbed amid inflation, higher construction costs and wildfire claims, according to the Times. Hundreds of thousands of California homeowners have lost coverage over the past several years despite paying higher premiums, the paper reported. More than 15,000 homes and businesses were destroyed in the Los Angeles County wildfires in January 2025, compounding a market that was already strained, per the Union-Tribune, and property insurers had been pulling back from the state amid record-setting wildfire losses even before that disaster, according to E&E News.
Two of California's largest home insurers, CSAA and Mercury, moved to raise rates by an average of 6.9% this year, with CSAA's increases hitting nearly 481,800 homeowners starting in March and Mercury's affecting more than 650,000 homeowners beginning in July, according to Insurance Journal. Farmers separately announced plans to eliminate a cap on the number of homeowners policies it offers in the state, the outlet reported.
Consumer Watchdog Warns of New Review Rules
Late last month, Consumer Watchdog said the Department of Insurance had adopted new rules creating an alternate rate-review process that effectively eliminates the public's ability to challenge proposed insurance rate increases below 7%, according to a release distributed via PR Newswire. The group said its interventions in rate increases below that threshold had saved consumers $2.6 billion over the prior 24 years, and warned insurers could use the new process to apply for two 6.9% rate hikes a year specifically to avoid public scrutiny. Those claims about the new rules' impact come from Consumer Watchdog and have not been independently verified.
