For the first time since California’s insurance commissioner became an elected office, two Democrats will face each other in the November general election.
Former San Francisco Supervisor Jane Kim and state Sen. Ben Allen finished first and second in the June primary, receiving about 27% and 20% of the vote, respectively. The winner will replace Ricardo Lara, the Democratic former lawmaker who has served two terms as insurance commissioner. Lara has led the state Department of Insurance for the past eight years, a period marked by some of the deadliest and most destructive wildfires in California history.
Either Kim or Allen will inherit a complex set of problems with direct consequences for communities across the state, including Southern California and the Inland Empire, where wildfire risk, housing costs and insurance availability have become increasingly urgent concerns.
In recent years, insurers have stopped writing new policies or declined to renew existing ones, particularly in areas considered at high risk for wildfire. The companies have pointed to growing fire danger tied to climate change, as well as inflationary pressures that followed the COVID-19 pandemic. As private coverage has become harder to find, more homeowners have turned to the FAIR Plan, the state’s insurer of last resort, which is required by law to provide fire coverage.
The FAIR Plan, run by an association of insurers, had more than 684,000 policies in force as of March, a 152% increase since September 2022. It has warned about its ability to continue paying claims after major disasters.
Under Proposition 103, approved by voters in 1988, California’s elected insurance commissioner has the power to approve rate increases, among other responsibilities. The measure has helped keep California homeowners insurance premiums near the national average over the years, but that could change. Last year, the commissioner put new regulations in place allowing insurers to use additional factors in setting premiums, including catastrophe models and reinsurance costs. Some companies have requested and received approval for rate increases and have begun writing policies again.
The next commissioner’s most pressing challenge will be making sure insurance remains available while still being affordable. The office also regulates auto, pet and certain health insurance matters, along with workers’ compensation.
Another major issue will be ensuring that insurers pay claims promptly so communities can recover after disasters. Fires in the Los Angeles area brought new attention to complaints that insurers delayed or denied claims, as well as concerns about underinsurance and the lack of clear standards for smoke damage. Those problems have slowed recovery in some communities. Pending legislation, including bills backed by Allen, whose district was affected by fires last year, and ongoing lawsuits are expected to address some of those issues. Organized fire survivors who previously called for Lara’s resignation over his department’s response are likely to keep pressure on the next commissioner.
Kim has drawn attention for proposing a “universal natural disaster insurance” system inspired by a program in New Zealand. Under her plan, part of policyholders’ premiums would be collected by insurance companies and transferred to the state. California would then guarantee coverage for fires and floods, while insurers would continue covering other risks.
Critics, including consumer advocates, have questioned why Kim has not provided more detail about how much money such a fund would require. Kim told CalMatters the idea would need further study, but said the program would generate revenue.
Opponents also argue that shifting catastrophe risk to the state is a mistake. They point to what they view as the failure of separating earthquake insurance from homeowners coverage, noting that most California homeowners now lack earthquake insurance.
“We taxpayers are already footing the bill,” Kim said. “When insurers and utility companies refuse to pay, they simply pass it on to us. Sharing risk is important.”
Kim also told CalMatters that an idea advanced by Merritt Farren, a Republican candidate for insurance commissioner, could be “a more efficient model.” Farren proposed creating a state reinsurance authority to encourage insurers to write policies in California.
If elected, Kim’s short-term priorities would include creating public dashboards showing how insurers spend policyholder premiums and documenting their claims records. She also wants to expand eligibility for a low-cost auto insurance program for drivers earning less than $38,000 a year, link an insurer’s ability to sell auto policies in California to its willingness to write homeowners policies, make the FAIR Plan more transparent by requiring its board membership and meetings to be public, and freeze rates when policyholders file claims.
Kim, an attorney and former San Francisco elected official, points to several accomplishments from her time in local government, including free community college tuition for city residents, the state’s first local ordinance establishing a $15 minimum wage, and tenant protections intended to prevent unjust evictions. She served as California director for U.S. Sen. Bernie Sanders’ 2020 presidential campaign and more recently as California director for the Working Families Party.
Her supporters include a long list of unions, including SEIU California. Sanders has endorsed her, as has U.S. Rep. Ro Khanna of Silicon Valley.
Allen, a state senator nearing the end of his time in the Legislature, says he wants to bring together the state, insurers, builders, local governments and firefighters to focus on reducing risk.
“I think that ultimately that is going to be the way we get out of this mess,” he told CalMatters.
Allen has described his approach as comprehensive, including a closer look at where Californians live and build. “We should not be building new, irresponsible buildings in high-risk areas,” he said. “We should find ways to carefully and sensitively encourage people to move away from those areas.”
If elected, Allen’s plans include creating a consumer advocate position within the Department of Insurance and increasing staffing to help customers. He also wants to require insurers to explain claim denials and provide real-time reports on delays and pending claims after disasters, increase oversight of the FAIR Plan and ensure it follows commissioner orders, and prohibit the insurance commissioner and department staff from going to work for the industry immediately after leaving the department.
Allen has emphasized his record as a state lawmaker, including bills aimed at holding insurance companies accountable. One law he wrote now requires insurers to pay 60% of a policyholder’s contents coverage without requiring a detailed inventory, while giving consumers more time to provide that inventory. He also highlights his work drafting Proposition 4, the bond measure approved by California voters in 2024 for safe drinking water access, wildfire prevention, and protection of communities and natural lands from climate risks.
Among Allen’s pending bills is a proposal that would require insurers to provide homeowners with 90 days’ notice and a clear explanation if they do not intend to renew a policy. Another bill would penalize insurance companies that fail to correct their practices after the Department of Insurance determines they have violated laws or regulations.
Allen also has significant support, including endorsements from the Legislature’s two leaders, Senate President Pro Tem Monique Limón and Assembly Speaker Robert Rivas. U.S. Sens. Adam Schiff and Alex Padilla of California, several unions and the Consumer Federation of California have also endorsed him.
Original source: CalMatters
