Californians cast their final ballots Tuesday in a statewide race that could have major consequences for homeowners, renters and businesses struggling with rising insurance costs and shrinking coverage options.
The next insurance commissioner will oversee the largest insurance market in the country, with authority over property, auto, health, life, pet, ride-hailing and workers’ compensation insurance. But in recent years, the office has been defined largely by one urgent issue: the growing difficulty of securing affordable home and fire insurance as wildfire risk intensifies.
For many residents in fire-prone parts of Southern California and the Inland Empire, the question is not abstract. Homeowners have faced nonrenewals, limited options and steep premium increases, while others have been pushed toward the FAIR Plan, California’s insurer of last resort for fire coverage.
The next commissioner will inherit a difficult balancing act: keeping insurers in the California market while protecting consumers from unaffordable rates. Several insurance companies that previously stopped writing new policies or renewing existing ones have begun using new state regulations that allow different tools in setting rates. Those changes are expected to contribute to higher premiums as the Department of Insurance continues reviewing and approving rate increases.
The office also will have to address the fallout from last year’s Los Angeles County fires, where delays and denials in insurance claims have slowed recovery and rebuilding for many property owners. State Farm, California’s largest individual insurer, and the FAIR Plan are both facing lawsuits from homeowners and legal action by the Department of Insurance over their handling of claims connected to those fires.
The leading Democratic candidates include state Sen. Ben Allen, who is leaving the Legislature because of term limits; Jane Kim, chair of the California Working Families Party and a former member of the San Francisco Board of Supervisors; Patrick Wolff, a financial analyst who has not held public office; and Steven Bradford, a former state senator and assemblymember.
On the Republican side, the leading candidates are Stacy Korsgaden, a longtime insurance agent, and Merritt Farren, an attorney who lost his home in last year’s Palisades fire. Neither has held statewide public office.
The candidates have generally identified similar problems in California’s insurance system, but their proposed solutions differ. Kim has called for creating a state authority for wildfires and floods funded by a portion of policyholders’ premiums. Farren has proposed a state reinsurance authority funded through a fee charged by insurers to policyholders, an idea that both Kim and Allen have also shown interest in. Bradford has said he would examine a public-private partnership aimed at keeping insurance companies active in California.
Consumer advocates and former insurance commissioners have described the job as a demanding role that requires weighing the needs of homeowners, landlords, renters and businesses while also ensuring insurers believe they can charge rates that reflect the state’s wildfire risk.
U.S. Rep. John Garamendi, a Democrat whose district includes much of Contra Costa and Solano counties, served as California’s first insurance commissioner and later returned to the office for a second stint. He has described the position as complex and difficult work requiring close attention to detail.
Original source: CalMatters
