Business
He claims to have saved California homeowners billions. The insurance industry hates him
Insurance industry groups have called it a “bomb-throwing bogus advocacy” group, a “publicity-seeking, dark money front,” and an organization out to protect its own “financial $elf-interest$.”
These are the kinds of attacks that Harvey Rosenfield and Consumer Watchdog, the advocacy group he founded nearly 40 years ago, have come to expect.
But in the last year, as home insurers have stopped writing new policies and retreated from parts of the state prone to wildfire, a new voice has joined the ranks of critics who say Harvey and Co. are making things worse: California’s elected insurance commissioner, Ricardo Lara, whose office has called Consumer Watchdog an entrenched interest group “defending its own piggy bank.”
California Insurance Commissioner Ricardo Lara speaks at a state Capitol news conference in Sacramento.
(Rich Pedroncelli / Associated Press)
If attacking a public advocacy group seems like an odd stance for an elected official, it’s made even odder by the fact that Lara wouldn’t have his job if it weren’t for Consumer Watchdog.
To understand the beef, you need to understand Proposition 103, a California law governing the insurance industry.
The campaign for that ballot measure in 1988 was one of the first missions of Consumer Watchdog, which formed in the wake of Ralph Nader’s success in spurring new consumer regulation.
That proposition, which Rosenfield helped write, enacted some of the most stringent insurance industry regulation in the nation. First, it created the office of an elected insurance commissioner to head the state Department of Insurance. Any time an insurance company seeks to raise prices, Proposition 103 requires that the firm apply to the commissioner for prior approval.
The goal, according to the text of the act, is to provide transparency into the insurance market and prevent insurers from charging “excessive, inadequate or unfairly discriminatory” rates to policyholders.
Nearly 35 years after Proposition 103 went into effect, Californians pay less for auto and home insurance than most Americans, with the state ranking among the bottom half of states for prices in both categories. But insurers say that long processing times for rate increases, among other regulations, have made it difficult to do business in the state as inflation and wildfire risks are on the rise.
One specific criticism of Consumer Watchdog revolves around a unique proviso of Proposition 103. The law allows public groups such as Consumer Watchdog to intervene in an insurance company’s application for a rate increase and argue — alongside the Department of Insurance — for what the ultimate price should be.
When groups such as Consumer Watchdog intervene, Proposition 103 stipulates that they can get paid for their efforts. After paying the intervening groups, insurance companies wind up passing those fees along to consumers. Insurance companies argue that this provides Consumer Watchdog and others a perverse incentive to turn every rate filing into a battle in order to get paid their fees.
“No other state has this kind of public participation and scrutiny built into the regulatory process, which is why Prop 103 is their number one target,” Rosenfield said. “It drives them nuts.”
“It comes down to the money, right?” said Carmen Balber, Consumer Watchdog’s executive director. “Thanks to the intervenor process, consumers pay less for their home and auto insurance than they would otherwise, and the industry has sought to claw back those profits for decades now.”
Consumer Watchdog’s Jamie Court, Harvey Rosenfield and Carmen Balber pose for a portrait in their Los Angeles offices Feb. 1.
(Jason Armond / Los Angeles Times)
There has been friction between the insurance industry and consumer groups for decades, but things have recently started to boil over.
The American Property Casualty Insurance Assn., the nation’s largest insurance lobbying group, bankrolled a new website attacking Consumer Watchdog in late 2023. Spokespeople for the Insurance Information Institute and the Personal Insurance Federation of California regularly opine to reporters that Rosenfield, Balber and the group’s president, Jamie Court, are wrenches in the underwriting machinery.
“The industry is going after Consumer Watchdog harder than normal,” said Brian Sullivan, owner and editor of insurance industry publication Risk Information. And the feud between the group and the Department of Insurance keeps escalating. “I have never seen the relationship degrade to the point it’s at now,” Sullivan said.
The industry groups have been pushing for changes in Sacramento and at the Department of Insurance — and at the close of last year’s legislative session, saw some results in the forms of promises to loosen regulations.
Lara, the state’s insurance commissioner, has had a rocky relationship with Consumer Watchdog from the start. After he pledged to not accept campaign funds from insurers in his first run for the office in 2018, a San Diego Union-Tribune investigation revealed that Lara had accepted hundreds of thousands of dollars in campaign contributions from people and companies with ties to the insurance industry. Consumer Watchdog filed a public records request for communications between Lara’s department and the insurance companies linked to the donations, and then sued the commissioner for allegedly failing to respond to the request in full. The group lost its initial lawsuit, but is continuing to fight it in the state Courts of Appeal.
Since then, the group has accused Lara’s office of ramming through rate increases without adequate review or opportunity for public input, and called his plans to change regulations with the goal of bringing more insurers back to the state market a “sham.”
Lara, in turn, noted in a news conference announcing his proposed reforms that “bombastic statements from entrenched interest groups” help no one, and that “one entity can unreasonably prolong rate filings” while “materially benefiting from a process that is meant for broader public participation.”
Michael Soller, Lara’s spokesperson with the department, has been less coy about the “entity” in question. After Consumer Watchdog accused Lara of striking a secret deal with insurance companies in the fall, Soller put out a statement saying that the group’s “cynical claims hide the truth that [it] has earned millions of dollars signing off on rate increases — while denying the reality that insurance has become impossible for some Californians to find at any price.” He added that the group “is turning a blind eye to consumers’ needs while defending its own insurance piggy bank.”
Yes, they’re a big pain, but that’s their job.
— Rep. John Garamendi, describing Consumer Watchdog
While other consumer groups such as United Policyholders and the Consumer Federation of California have taken a more measured approach, Rosenfield has been blunt. “A commissioner more disposed to protect the industry has come along,” Rosenfield said. “Ultimately, there’s accountability for that within our system of democracy.”
“He’s kind of out a little bit on his own on this in terms of opposing what Lara’s doing,” said Brian Sullivan of Risk Information.
Increasingly, Consumer Watchdog is one of the only consumer advocates even participating in the Proposition 103 process. In the early days of the regime, half a dozen or so major consumer groups were willing to enter the fray. But over time, the pool of dedicated groups with the resources to fight long regulatory battles and only get paid months (and sometimes years) after their work begins, has dwindled to a handful. Now state records show that 75% of the time, if there’s an intervening entity in a rate filing, it’s Consumer Watchdog.
This is where the accusation of self-interest comes to bear. Since Rosenfield helped write Proposition 103, he also wrote in the fee mechanism that pays his salary at Consumer Watchdog. According to critics, that amounts to self-dealing at the consumers’ expense.
State records show that over the last two decades, the group has been paid $11.6 million in fees by the state for its interventions in rate filings, or an average of $575,000 each year. Proposition 103 isn’t Consumer Watchdog’s only policy focus, nor is it the group’s only source of revenue. Consumer Watchdog brought in $3.75 million in revenue in 2022 from donations, grants and other sources, according to public filings.
For that $11.6 million Proposition 103 payout, the group has been party to saving consumers $5.51 billion in the last two decades, according to an analysis produced by Consumer Watchdog. In the last five years, Consumer Watchdog says its actions have contributed to $2.1 billion in savings for Californians. The group arrived at these figures by comparing the dollar value of rate increases that insurance companies sought in the last 22 years against the final amount they got when Consumer Watchdog challenged their request.
In the last two years, when Consumer Watchdog intervened in a company’s request to raise its rates, the final result for ratepayers ended up 38% lower than what the companies requested for home insurance, and 29% lower for auto insurance, on average. When Consumer Watchdog didn’t enter the fray, the final amount approved by the state insurance department was only 2-3% lower than what companies requested on average, according to the report.
Soller, the insurance department spokesperson, calls these numbers “deeply flawed.”
“Based on our review, their claims are highly inflated,” Soller wrote in a statement. “They compared the amount originally requested by the insurance company to the amount approved, with no accounting for what the department’s role was in that three-party negotiation.”
In other words, it is impossible to attribute all of those savings to the group’s intervention because state insurance regulators probably would have argued down the companies’ requests on its own.
But the scale of California’s insurance market means even small concessions can have a big effect on ratepayers. If Consumer Watchdog’s interventions contributed 0.3% of those $5.2 billion that insurance rates have been pushed downward, then the group has saved Californians millions more than it’s been paid in fees.
Rep. John Garamendi (D-Walnut Grove), who served as the state’s first and fourth elected insurance commissioner, finds the attempts to discredit Consumer Watchdog disturbing, if not surprising.
Rep. John Garamendi speaks at a meeting in South Lake Tahoe, Calif., in August 2019.
(Rich Pedroncelli / Associated Press)
“Yes, they’re a big pain, but that’s their job,” Garamendi said. “These organizations are absolutely essential in the process of a rational insurance market, with premiums that are fairly priced, policies that are clearly understood and written, claims that are paid.”
Sullivan, for his part, believes that the hate focused on Harvey and Consumer Watchdog is more of a sideshow than a debate about how to respond to the changing insurance market.
“It has nothing to do with the problems in the state,” Sullivan said. “They’re fighting amongst themselves over very little — it isn’t the intervenor process causing the long delay times” that are at the root of the industry’s problems with the regulatory system.
The fundamental problem, according to industry groups and observers, is that rate filings often take a year or more to work their way through the system, which can lead to a punishing lag between costs and revenues for insurers.
Many insurers are still limiting the number of new policies they write in California. If changes do come, it would take many months, and probably years, before they could ripple through to policies and change insurers’ business decisions about operating in the state.
Commissioner Lara is hiring more staff and changing filing rules with the goal of speeding up the process. His office also plans to roll out new rules that could allow insurance companies to lock in higher prices further in advance, by allowing them to use algorithmic modeling to set higher prices for wildfire risk zones and pass through some of the costs of reinsurance — insurance policies that insurance companies themselves buy to cover their own losses.
Consumer Watchdog, in a surprise to no one, has some strong opinions about Lara’s plans.
Elon Musk’s Tesla is no longer the top electric vehicle seller in the world as demand at home has cooled while competition heated up abroad.
Tesla lost its pole position after reporting 1.64 million deliveries in 2025, roughly 620,000 fewer than Chinese competitor BYD.
Tesla struggled last year amid increasing competition, waning federal support for electric vehicle adoption and brand damage triggered by Musk’s stint in the White House.
Musk is turning his focus toward robotics and autonomous driving technology in an effort to keep Tesla relevant as its EVs lose popularity.
On Friday, the company reported lower than expected delivery numbers for the fourth quarter of 2025, a decline from the previous quarter and a year-over-year decrease of 16%. Tesla delivered 418,227 vehicles in the fourth quarter and produced 434,358.
According to a company-compiled consensus from analysts posted on Tesla’s website in December, the company was projected to deliver nearly 423,000 vehicles in the fourth quarter.
Tesla’s annual deliveries fell roughly 8% last year from 1.79 million in 2024. Its third-quarter deliveries saw a boost as consumers rushed to buy electric vehicles before a $7,500 tax credit expired at the end of September.
“There are so many contributing factors ranging from the lack of evolution and true innovation of Musk’s product to the loss of the EV credits,” said Karl Brauer, an analyst at iSeeCars.com. “Teslas are just starting to look old. You have a bunch of other options, and they all look newer and fresher.”
BYD is making premium electric vehicles at an affordable price point, Brauer said, but steep tariffs on Chinese EVs have effectively prevented the cars from gaining popularity in the U.S.
Other international automakers like South Korea’s Hyundai and Germany’s Volkswagen have been expanding their EV offerings.
In the third quarter last year, the American automaker Ford sold a record number of electric vehicles, bolstered by its popular Mustang Mach-E SUV and F-150 Lightning pickup truck.
In October, Tesla released long-anticipated lower-cost versions of its Model 3 and Model Y in an attempt to attract new customers.
However, analysts and investors were disappointed by the launch, saying the models, which start at $36,990, aren’t affordable enough to entice a new group of consumers to consider going green.
As evidenced by Tesla’s continuing sales decline, the new Model 3 and Model Y have not been huge wins for the company, Brauer said.
“There’s a core Tesla following who will never choose anything else, but that’s not how you grow,” Brauer said.
Tesla lost a swath of customers last year when Musk joined the Trump administration as the head of the so-called Department of Government Efficiency.
Left-leaning Tesla owners, who were originally attracted to the brand for its environmental benefits, became alienated by Musk’s political activity.
Consumers held protests against the brand and some celebrities made a point of selling their Teslas.
Although Musk left the White House, the company sustained significant and lasting reputation damage, experts said.
Investors, however, remain largely optimistic about Tesla’s future.
Shares are up nearly 40% over the last six months and have risen 16% over the past year.
Brauer said investors are clinging to the hope that Musk’s robotaxi business will take off and the ambitious chief executive will succeed in developing humanoid robots and self-driving cars.
The roll-out of Tesla robotaxis in Austin, Texas, last summer was full of glitches, and experts say Tesla has a long way to go to catch up with the autonomous ride-hailing company Waymo.
Still, the burgeoning robotaxi industry could be extremely lucrative for Tesla if Musk can deliver on his promises.
“Musk has done a good job, increasingly in the past year, of switching the conversation from Tesla sales to AI and robotics,” Brauer said. “I think current stock price largely reflects that.”
Shares were down about 2% on Friday after the company reported earnings.
Grok, the chatbot of Elon Musk’s artificial intelligence company xAI, published sexualized images of children as its guardrails seem to have failed when it was prompted with vile user requests.
Users used prompts such as “put her in a bikini” under pictures of real people on X to get Grok to generate nonconsensual images of them in inappropriate attire. The morphed images created on Grok’s account are posted publicly on X, Musk’s social media platform.
The AI complied with requests to morph images of minors even though that is a violation of its own acceptable use policy.
“There are isolated cases where users prompted for and received AI images depicting minors in minimal clothing, like the example you referenced,” Grok responded to a user on X. “xAI has safeguards, but improvements are ongoing to block such requests entirely.”
xAI did not immediately respond to a request for comment.
Its chatbot posted an apology.
“I deeply regret an incident on Dec 28, 2025, where I generated and shared an AI image of two young girls (estimated ages 12-16) in sexualized attire based on a user’s prompt,” said a post on Grok’s profile. “This violated ethical standards and potentially US laws on CSAM. It was a failure in safeguards, and I’m sorry for any harm caused. xAI is reviewing to prevent future issues.”
The government of India notified X that it risked losing legal immunity if the company did not submit a report within 72 hours on the actions taken to stop the generation and distribution of obscene, nonconsensual images targeting women.
Critics have accused xAI of allowing AI-enabled harassment, and were shocked and angered by the existence of a feature for seamless AI manipulation and undressing requests.
“How is this not illegal?” journalist Samantha Smith posted on X, decrying the creation of her own nonconsensual sexualized photo.
Musk’s xAI has positioned Grok as an “anti-woke” chatbot that is programmed to be more open and edgy than competing chatbots such as ChatGPT.
In May, Grok posted about “white genocide,” repeating conspiracy theories of Black South Africans persecuting the white minority, in response to an unrelated question.
In June, the company apologized when Grok posted a series of antisemitic remarks praising Adolf Hitler.
Companies such as Google and OpenAI, which also operate AI image generators, have much more restrictive guidelines around content.
The proliferation of nonconsensual deepfake imagery has coincided with broad AI adoption, with a 400% increase in AI child sexual abuse imagery in the first half of 2025, according to Internet Watch Foundation.
xAI introduced “Spicy Mode” in its image and video generation tool in August for verified adult subscribers to create sensual content.
Some adult-content creators on X prompted Grok to generate sexualized images to market themselves, kickstarting an internet trend a few days ago, according to Copyleaks, an AI text and image detection company.
The testing of the limits of Grok devolved into a free-for-all as users asked it to create sexualized images of celebrities and others.
xAI is reportedly valued at more than $200 billion, and has been investing billions of dollars to build the largest data center in the world to power its AI applications.
However, Grok’s capabilities still lag competing AI models such as ChatGPT, Claude and Gemini, that have amassed more users, while Grok has turned to sexual AI companions and risque chats to boost growth.
Business
A tale of two Ralphs — Lauren and the supermarket — shows the reality of a K-shaped economy
John and Theresa Anderson meandered through the sprawling Ralph Lauren clothing store on Rodeo Drive, shopping for holiday gifts.
They emerged carrying boxy blue bags. John scored quarter-zip sweaters for himself and his father-in-law, and his wife splurged on a tweed jacket for Christmas Day.
“I’m going for quality over quantity this year,” said John, an apparel company executive and Palos Verdes Estates resident.
They strolled through the world-famous Beverly Hills shopping mecca, where there was little evidence of any big sales.
John Anderson holds his shopping bags from Ralph Lauren and Gucci at Rodeo Drive.
(Juliana Yamada / Los Angeles Times)
One mile away, shoppers at a Ralphs grocery store in West Hollywood were hunting for bargains. The chain’s website has been advertising discounts on a wide variety of products, including wine and wrapping paper.
Massi Gharibian was there looking for cream cheese and ways to save money.
“I’m buying less this year,” she said. “Everything is expensive.”
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The tale of two Ralphs shows how Americans are experiencing radically different realities this holiday season. It represents the country’s K-shaped economy — the growing divide between those who are affluent and those trying to stretch their budgets.
Some Los Angeles residents are tightening their belts and prioritizing necessities such as groceries. Others are frequenting pricey stores such as Ralph Lauren, where doormen hand out hot chocolate and a cashmere-silk necktie sells for $250.
People shop at Ralphs in West Hollywood.
(Juliana Yamada / Los Angeles Times)
In the K-shaped economy, high-income households sit on the upward arm of the “K,” benefiting from rising pay as well as the value of their stock and property holdings. At the same time, lower-income families occupy the downward stroke, squeezed by inflation and lackluster income gains.
The model captures the country’s contradictions. Growth looks healthy on paper, yet hiring has slowed and unemployment is edging higher. Investment is booming in artificial intelligence data centers, while factories cut jobs and home sales stall.
The divide is most visible in affordability. Inflation remains a far heavier burden for households lower on the income distribution, a frustration that has spilled into politics. Voters are angry about expensive rents, groceries and imported goods.
“People in lower incomes are becoming more and more conservative in their spending patterns, and people in the upper incomes are actually driving spending and spending more,” said Kevin Klowden, an executive director at the Milken Institute, an economic think tank.
“Inflationary pressures have been much higher on lower- and middle-income people, and that has been adding up,” he said.
According to a Bank of America report released this month, higher-income employees saw their after-tax wages grow 4% from last year, while lower-income groups saw a jump of just 1.4%. Higher-income households also increased their spending year over year by 2.6%, while lower-income groups increased spending by 0.6%.
The executives at the companies behind the two Ralphs say they are seeing the trend nationwide.
Ralph Lauren reported better-than-expected quarterly sales last month and raised its forecasts, while Kroger, the grocery giant that owns Ralphs and Food 4 Less, said it sometimes struggles to attract cash-strapped customers.
“We’re seeing a split across income groups,” interim Kroger Chief Executive Ron Sargent said on a company earnings call early this month. “Middle-income customers are feeling increased pressure. They’re making smaller, more frequent trips to manage budgets, and they’re cutting back on discretionary purchases.”
People leave Ralphs with their groceries in West Hollywood.
(Juliana Yamada / Los Angeles Times)
Kroger lowered the top end of its full-year sales forecast after reporting mixed third-quarter earnings this month.
On a Ralph Lauren earnings call last month, CEO Patrice Louvet said its brand has benefited from targeting wealthy customers and avoiding discounts.
“Demand remains healthy, and our core consumer is resilient,” Louvet said, “especially as we continue … to shift our recruiting towards more full-price, less price-sensitive, higher-basket-size new customers.”
Investors have noticed the split as well.
The stock charts of the companies behind the two Ralphs also resemble a K. Shares of Ralph Lauren have jumped 37% in the last six months, while Kroger shares have fallen 13%.
To attract increasingly discerning consumers, Kroger has offered a precooked holiday meal for eight of turkey or ham, stuffing, green bean casserole, sweet potatoes, mashed potatoes, cranberry and gravy for about $11 a person.
“Stretch your holiday dollars!” said the company’s weekly newspaper advertisement.
Signs advertising low prices are posted at Ralphs.
(Juliana Yamada / Los Angeles Times)
In the Ralph Lauren on Rodeo Drive, sunglasses and polo shirts were displayed without discounts. Twinkling lights adorned trees in the store’s entryway and employees offered shoppers free cookies for the holidays.
Ralph Lauren and other luxury stores are taking the opposite approach to retailers selling basics to the middle class.
They are boosting profits from sales of full-priced items. Stores that cater to high-end customers don’t offer promotions as frequently, Klowden of the Milken Institute said.
“When the luxury stores are having sales, that’s usually a larger structural symptom of how they’re doing,” he said. “They don’t need to be having sales right now.”
Jerry Nickelsburg, faculty director of the UCLA Anderson Forecast, said upper-income earners are less affected by inflation that has driven up the price of everyday goods, and are less likely to hunt for bargains.
“The low end of the income distribution is being squeezed by inflation and is consuming less,” he said. “The upper end of the income distribution has increasing wealth and increasing income, and so they are less affected, if affected at all.”
The Andersons on Rodeo Drive also picked up presents at Gucci and Dior.
“We’re spending around the same as last year,” John Anderson said.
At Ralphs, Beverly Grove resident Mel, who didn’t want to share her last name, said the grocery store needs to go further for its consumers.
“I am 100% trying to spend less this year,” she said.
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