The insurance commissioner’s job might sound like dry bureaucratic business, but it carries significant weight. The office oversees the California Department of Insurance, which regulates everything from homeowners and auto coverage to health, life and workers’ compensation policies. Part of the job is ensuring insurance stays available and affordable, while making sure companies actually follow through on what they promise policyholders.

That mission matters more than ever as wildfire risk climbs across California. Seven of the ten most destructive fires in state history have struck in just the last ten years. Add in the broader rise in the cost of living, and insurance premiums — which the department has final say over — have become a pressing concern for families statewide.

Unlike most states, where the position is appointed, California is among just 11 states that let voters pick their insurance commissioner directly. Current Commissioner Ricardo Lara, a Democrat and former state lawmaker, has held the post for eight years. His term ends in January, and two Democrats — state Sen. Ben Allen and former San Francisco Supervisor Jane Kim — are now competing to succeed him.

Whoever wins will have to juggle competing interests: everyday consumers, insurance companies, advocacy groups and wildfire survivors all pulling in different directions.

“Your role is not to be friend or foe, except (be a friend) to the California consumer,” said Lucy Wang, who served as special counsel for the department under Lara before leaving last year to join a San Francisco law firm representing insurers.

CalMatters spoke with Wang, consumer advocates and a former commissioner to better understand what the office can — and can’t — do. Lara declined an interview request. A department spokesperson, Michael Soller, said in a statement that Lara “wielded executive power to overcome entrenched opposition from all sides and modernize insurance regulation to meet the climate crisis,” following what the department described as extensive public outreach.

Shaping policy and rules

The commissioner has real power to shape rules that directly hit consumers’ wallets, either through regulation or by partnering with legislators on new laws.

A few years back, several major insurers pulled out of California or stopped renewing policies after a string of catastrophic wildfires drove up claims costs. Insurers argued that the rates they were allowed to charge didn’t reflect their actual risk, and that state regulators were too slow approving rate hikes. Lawmakers tried and failed to fix the problem through legislation, prompting Gov. Gavin Newsom to order Lara to find a solution. Last year, Lara rolled out new rules that borrowed heavily from those stalled bills — including provisions the insurance industry had pushed for years.

Under the new framework, insurers can factor in forward-looking catastrophe models — not just historical loss data — along with reinsurance costs when calculating premiums. Translation for homeowners: rates are likely to keep climbing, if they haven’t already. The department is also working to process rate-increase requests faster.

Lara’s office and the insurance industry both say the strategy, dubbed the “sustainable insurance strategy,” is showing early signs of success. Some insurers have started writing new policies again in California, though the department can’t yet say how many are actually new business, according to Soller.

The state’s FAIR Plan — the insurer of last resort for property owners who can’t find coverage elsewhere — ballooned in recent years as private insurers retreated. Its growth has slowed lately, something the department points to as evidence the new rules are having an effect. As of June, the FAIR Plan carried nearly 700,000 active policies, up 8% since last September but a staggering 157% higher than September 2022.

Another rule change affects so-called “intervenors” — members of the public who can formally challenge an insurer’s request for a rate hike under Proposition 103, the voter-approved law governing insurance regulation. Intervenors can be compensated for their efforts, and the advocacy group Consumer Watchdog, founded by the author of Prop. 103, has long dominated that role. The group says it has saved Californians $6.4 billion between 2002 and 2024.

“(The intervenor process is) an extra check on insurance prices going higher and higher,” said Will Pletcher, an attorney with Consumer Watchdog. He noted that insurance companies will always have deeper pockets than consumers, making outside scrutiny of proposed rates essential.

Homeowners in California — where home values are the nation’s highest — pay premiums that rank in the middle nationally, but those costs have jumped 23% since 2023, according to a Bankrate.com analysis.

Lara’s new regulation requires intervenors to demonstrate their input is “substantial” and separate from the department’s own analysis, and that it actually influences the outcome. Thirty-two consumer, labor and advocacy groups oppose the change, warning it will make it harder for intervenors — who earned $14.2 million collectively from 2002 to 2024 — to get paid, potentially discouraging future challenges to rate hikes and leaving consumers with higher bills.

Tension between Lara and Consumer Watchdog isn’t new. The group has repeatedly questioned his relationships with the insurance industry and pushed for greater transparency from his office.

“The current commissioner is trying to punish (founder) Harvey (Rosenfield) and Watchdog, so you have these messed-up rules,” said Robert Herrell, executive director of the Consumer Federation of California, another group that occasionally intervenes in rate cases.

Herrell, a former department employee himself, argued that outside scrutiny brings value the department’s own staff can’t always provide. “You don’t want to just rely on the expertise of the department,” he said. “Outside, fresh eyes could see new things.”

Lara has also floated a rule the insurance industry doesn’t love — requiring companies to submit plans detailing how they’ll manage solvency risk. Wang, who helped draft the proposal, said it’s about giving regulators the fullest possible picture to keep the market stable.

Insurers already report financial data to the National Association of Insurance Commissioners, and industry representatives argued in public comments this summer that the new requirement would be redundant and costly, requiring new staff and expertise. Some advocacy groups, including Public Citizen, back the proposal and want the department to go even further by mandating specific disclosures about climate-related risk.

The commissioner’s authority extends to other corners of the market, too. In July, a California appeals court upheld Lara’s right to let insurers factor marital status into auto insurance pricing — a practice allowed since 1996 under rules established by former Commissioner Chuck Quackenbush. Consumer groups have found that unmarried drivers often pay more as a result. The case is likely headed for further appeal, possibly to the California Supreme Court.

Holding insurers accountable

Beyond setting policy, the commissioner has authority to investigate insurers and push for changes in their conduct, sometimes working alongside lawmakers to force compliance.

Following the devastating 1991 Oakland Hills fire, many homeowners learned they didn’t have nearly enough coverage. Then-Commissioner John Garamendi, now a member of Congress, pressured insurers into providing an extra $300 million in coverage. Garamendi earned a reputation as an aggressive consumer advocate willing to clash with the industry — a strategy that produced mixed results over time.

More recently, survivors of the devastating January 2025 Los Angeles wildfires — many still struggling to rebuild — called on Lara to resign late last year, frustrated by what they described as slow claims processing and inadequate support from his department.

“Fire survivors are 100% right that the way they’re treated is wrong,” said Amy Bach, executive director of United Policyholders, a consumer advocacy group. But she acknowledged the department’s hands are somewhat tied when it comes to certain insurer practices, such as assigning survivors multiple adjusters, and it has no power to resolve individual disputes between policyholders and their insurers.

“The reality is that (the department) cannot stand in the shoes of a private attorney,” Bach said.

Even so, former Commissioner Dave Jones argued the office should be more aggressive about pursuing enforcement actions.

“I think it’s important to have a commissioner that is willing to exercise the authority that he or she is granted within the statutes, and is independent not just from the influence of the insurance industry, but also from the governor and the Legislature,” Jones said.

Lara’s department did launch an investigation into how State Farm handled claims from last year’s Los Angeles County wildfires. In May, the department found that State Farm had violated state law — including delaying and underpaying claims — and recommended millions of dollars in penalties along with a possible one-year suspension. However, no hearing has yet been scheduled, and fire survivors filed a lawsuit last month against Lara and the department demanding a judge be appointed to oversee the matter and seeking to participate as intervenors.

The department also took legal action against the FAIR Plan, accusing it of wrongly denying smoke-damage claims stemming from the Eaton and Palisades fires. Smoke damage can be difficult to detect and there are currently no standardized testing protocols, though two bills recently passed by the Legislature would create first-in-the-nation standards for evaluating such claims.

According to the department, survivors of last year’s fires filed roughly 13,000 smoke-damage claims. Lara convened a task force to study the issue, and its recommendations — including testing for toxic contaminants that would affect what insurance must cover — have been folded into the pending legislation now awaiting the governor’s signature. Lara has backed Assembly Bill 1795, while the companion measure is AB 1642.

Wildfires may dominate the current conversation, but the commissioner’s portfolio touches many other areas of insurance as well. During Jones’ time in office, health insurance was a central focus, coinciding with the launch of Covered California under the Affordable Care Act.

While the commissioner reviews health insurance rate changes, the office cannot actually block rate hikes — despite Jones’ unsuccessful push to expand that authority.

Still, Jones managed to bar certain insurers from California’s small-business health insurance marketplace, citing patterns of excessive rate increases. He also joined other consumer advocates in successfully pushing for caps on what Covered California enrollees pay for specialty medications, a move that put him at odds with then-Gov. Jerry Brown’s administration.

“That made people very unhappy with me, but it was the right thing to do,” Jones said. “We need a commissioner who’s willing to do that.”

Original source: CalMatters

The post What California’s Insurance Commissioner Does — and Why It Matters to Your Bottom Line appeared first on The Hemet & San Jacinto Chronicle.

As wildfire risk grows alongside a warming climate, understanding how the insurance market actually works matters more than ever. Whether a family can rebuild after a disaster — or a neighborhood can recover at all — often hinges on the health of that market. And insurance shapes daily life well beyond catastrophe: where people can afford to live, how communities take shape, whether commuters can legally get behind the wheel.

With voters set to choose a new state insurance commissioner in November, it’s worth separating fact from fiction on some of the most persistent misconceptions about insurance in California.

Myth: Only homeowners and the wealthy need to worry about insurance troubles.

Fact: Nearly everyone has a stake in this, including renters, landlords, small business owners and anyone who gets behind the wheel.

Roughly 44% of Californians rent rather than own, according to U.S. Census figures. But landlords have absorbed rising insurance costs of their own, and some have told CalMatters they’ve passed those expenses on to tenants through higher rent.

California doesn’t require renters to carry their own insurance policies, though some landlords do. Still, consumer advocates urge tenants to get coverage anyway, since it can mean the difference between recovering quickly after a fire and being left with nothing.

The squeeze extends to affordable housing providers as well, threatening the supply of low-cost units the state desperately needs. Some nonprofit housing operators say mainstream insurers have pulled back from covering commercial and multifamily properties, forcing them toward “non-admitted” insurers — companies not licensed or backstopped by the state. Others have dipped into reserve funds to keep up with premium hikes, unable to pass those costs to tenants because affordable-housing rules cap what they can charge.

“If organizations have to come out of pocket to cover premiums, it’s just not sustainable,” said Erich Nakano, director of special projects for the Little Tokyo Service Center, a Los Angeles nonprofit that owns more than 1,000 affordable units across the region.

Auto insurance isn’t spared either — California ranks among the priciest states in the country for car coverage, according to industry data, driven partly by climate-related disaster risk and the rising cost of vehicle repairs. And unlike homeowners without a mortgage or renters who can opt out of coverage, every driver in the state is legally obligated to carry auto insurance.

Myth: California’s insurance mess is entirely the fault of state lawmakers and regulators.

Fact: States across the country are grappling with soaring costs and vanishing coverage as climate-driven disasters — hurricanes in Florida, tornadoes in Texas — grow more frequent and destructive.

Proposition 103, the 1988 ballot measure that governs California’s insurance regulation, often takes the blame from critics who argue the state over-regulates the industry and should loosen its grip on the free market.

But that argument doesn’t hold up well when you look elsewhere. Florida, which regulates far more loosely, has the highest average homeowners insurance premiums in the nation, according to the Insurance Information Institute, an industry trade group. California, by contrast, sits somewhere in the middle nationally — in part because Prop. 103 requires state approval before insurers can raise rates.

Frustration over slow claims processing and denials has landed squarely on Insurance Commissioner Ricardo Lara, whose term ends this year. Survivors of last year’s deadly Los Angeles County fires have called for his resignation, blaming him for the industry’s shortcomings.

But insurance experts caution there’s no quick fix. “[Fire survivors] have the right to be angry about the impact of industry trends on them,” said Amy Bach, executive director of the consumer advocacy group United Policyholders. Still, she noted, the insurance commissioner’s authority over how insurers operate — including staffing decisions on claims — is limited by law.

That said, Lara’s department did find that State Farm, California’s largest insurer, violated state law in how it handled claims from the L.A.-area fires. A hearing before an administrative law judge, not yet scheduled, will determine what penalties, if any, the department’s findings will trigger.

Myth: Insurance companies are struggling financially.

Fact: The industry posted record profits last year, and executive pay hasn’t suffered either.

When insurers began pulling back from the California market a few years ago, they argued that state regulators were too slow to approve the rate increases needed to keep pace with growing wildfire risk. In response, Lara introduced new rules meant to speed up rate reviews and let insurers factor in catastrophe modeling and reinsurance costs when setting prices — changes that have contributed to rising premiums statewide, mirroring trends nationally.

Even so, the industry had a banner year. U.S. insurers collected $68.7 billion in premiums last year, up sharply from $25.3 billion in 2024, according to the National Association of Insurance Commissioners. Insurers’ overall financial reserves swelled to a record $1.27 trillion, according to an analysis by the consumer advocacy group Public Citizen.

Much of that windfall came from lower nationwide losses tied to extreme weather compared to the year before — the major exception being the Los Angeles-area fires, which caused roughly $37.5 billion in damage and were described by regulators as among “the costliest fires in world history.”

Meanwhile, executives at the country’s 10 largest insurance companies collected a combined $134 million in compensation in 2024, Public Citizen found. A separate analysis by the Consumer Federation of America showed that CEO pay rose in step with rising auto and home insurance premiums that same year.

Myth: The FAIR Plan is a state-run insurance program.

Fact: It’s actually operated by a consortium of private insurance companies that do business in California.

The FAIR Plan exists by law to provide fire insurance to property owners who can’t get coverage anywhere else. Every insurer licensed to sell policies in California is required to participate, and the plan’s board is staffed by industry representatives. Its inner workings remain largely hidden from public view. The state’s insurance department has taken legal action against the FAIR Plan multiple times, most recently over allegations that it denied legitimate smoke-damage claims stemming from the L.A. fires.

As of March, the FAIR Plan carried more than 684,000 policies — nearly 663,000 residential and over 21,000 commercial — a jump of more than 152% since 2023.

Growth in enrollment has slowed somewhat since late last year, but the sheer volume of policies underscores a market that remains far from stable. FAIR Plan customers, notably, often end up paying more for less: The plan covers fire damage only, meaning policyholders must still purchase separate coverage for everything else.

Original source: CalMatters

The post Setting the Record Straight: Common Insurance Myths California Homeowners Should Know appeared first on The Hemet & San Jacinto Chronicle.

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

The post California Insurance Commissioner Race Set as Kim Faces Allen appeared first on The Hemet & San Jacinto Chronicle.

Former San Francisco Supervisor Jane Kim and state Sen. Ben Allen advanced from the June primary as the top two finishers. With 88% of ballots counted, Kim had about 27% of the vote and Allen had about 20%. The winner will replace Insurance Commissioner Ricardo Lara, a Democrat and former state lawmaker who is completing his second term.

It is the first time since California made the insurance commissioner an elected office that two Democrats will face each other in the November runoff.

The next commissioner will inherit a system under intense strain. In recent years, major insurers have stopped writing new policies or declined to renew existing ones in parts of California, particularly in areas considered at high risk for wildfire. Companies have pointed to climate-driven fire danger and post-pandemic inflation as reasons for pulling back.

That shift has forced more homeowners into the California FAIR Plan, the state’s insurer of last resort for fire coverage. The plan, which is operated by an association of insurers, had more than 684,000 policies in force as of March — a 152% increase since September 2022. The FAIR Plan has also warned about its ability to continue covering claims after major disasters.

For residents in fire-prone areas of Riverside, San Bernardino and other Southern California counties, the debate is not abstract. Insurance availability and cost can affect whether families can keep their homes, whether buyers can obtain mortgages, and whether businesses can afford to operate.

Under Proposition 103, the 1988 voter-approved law that reshaped insurance regulation in California, the elected insurance commissioner has authority over rate increases, among other powers. The law has helped keep California homeowners insurance premiums in the middle range compared with other states, but that may be changing.

Last year, the state adopted new rules allowing insurers to use additional factors when setting premiums, including catastrophe modeling and reinsurance costs. Some companies have already sought and received approval for rate hikes, and some have begun writing policies again.

Balancing affordability with availability is expected to be the central challenge for the next commissioner. The office also regulates auto insurance, pet insurance, parts of the health insurance market and workers’ compensation.

Another major issue will be claims handling after disasters. The 2025 Los Angeles-area fires intensified scrutiny of insurer practices, including delayed or denied claims, underinsurance and disputes over smoke damage. Those problems have slowed rebuilding for some residents and small businesses. Pending legislation, lawsuits and pressure from organized fire survivors are expected to keep the issue at the forefront after Lara leaves office.

Kim has drawn attention for proposing what she calls “natural disaster insurance for all,” a state-backed system inspired by a New Zealand model. Under her concept, insurers would collect a portion of policyholder premiums and direct that money to the state, which would guarantee fire and flood coverage. Private insurers would continue covering other risks.

Critics, including some consumer advocates, have questioned how much funding such a system would require and whether shifting catastrophic risk to the state would create new fiscal problems. Some have compared the idea to the separation of earthquake coverage from homeowners insurance, noting that many California homeowners now do not carry earthquake insurance.

Kim has argued that taxpayers are already left paying when insurers and utilities do not cover losses.

“We already are on the hook,” Kim told CalMatters. “When insurers and utilities refuse to pay, they just pass it on to us anyway. Sharing the risk is important.”

She has also said that a proposal raised by Republican commissioner candidate Merritt Farren — creating a state reinsurance authority to encourage insurers to keep writing policies in California — could prove to be “a more efficient model.”

Kim’s shorter-term proposals include creating public dashboards showing how insurers spend premiums and how they handle claims; expanding eligibility for a low-cost auto insurance program for drivers earning less than $38,000 a year; connecting an insurer’s ability to sell auto coverage in California to its willingness to write homeowners policies; increasing transparency at the FAIR Plan by making its board membership and meetings public; and freezing rates when policyholders file claims.

An attorney and former San Francisco elected official, Kim points to her work on free community college for city residents, a $15 minimum wage ordinance and tenant protections against unjust evictions. She later served as California director for Sen. Bernie Sanders’ 2020 presidential campaign and as California director for the Working Families Party.

Her endorsements include Sanders, Rep. Ro Khanna of Silicon Valley and several labor groups, including SEIU California.

Allen, who represents a Los Angeles-area district in the state Senate and will be termed out of the Legislature, has emphasized a broader risk-reduction strategy. He has said the state needs to bring together insurers, builders, local governments, firefighters and state officials to reduce fire danger and stabilize the market.

“I think that’s ultimately going to be the way that we get ourselves out of this mess,” Allen told CalMatters.

Allen has also called for a more careful approach to development in high-risk areas.

“We shouldn’t be building new construction that is irresponsible in high-risk areas,” he said. “We should be looking for ways to carefully and sensitively encourage people to pull back from high-risk areas.”

If elected, Allen says he would create a consumer advocate position within the Department of Insurance and increase staffing for customer service. He also wants insurers to provide clearer explanations when they deny claims and to give real-time information about delays and unresolved claims after disasters.

Other parts of his platform include stronger oversight of the FAIR Plan, ensuring the plan follows commissioner orders, and prohibiting the insurance commissioner and department staff from immediately taking jobs in the insurance industry after leaving state service.

Allen has highlighted his legislative record on insurance issues. One law he authored requires insurers to pay 60% of a policyholder’s contents coverage without first requiring a detailed inventory and gives consumers more time to provide that inventory. He also authored Proposition 4, the climate bond voters approved in 2024 for safe drinking water, wildfire prevention and protection of communities and natural lands from climate risks.

Allen is also carrying pending bills that would require insurers to give homeowners 90 days’ notice before nonrenewal, along with a clear explanation, and impose penalties on companies that fail to correct unlawful practices identified by the Department of Insurance.

His endorsers include Senate President Pro Tem Monique Limón, Assembly Speaker Robert Rivas, U.S. Sens. Adam Schiff and Alex Padilla, labor unions and the Consumer Federation of California.

Original source: CalMatters

The post California Insurance Commissioner Race Set as Kim and Allen Face Off appeared first on The Hemet & San Jacinto Chronicle.

Could grants to low- and middle-income residents help? That’s an idea California Insurance Commissioner Ricardo Lara wants to bring to the Legislature next year, he said in conversation today with CalMatters’ economy reporter Levi Sumagaysay.

Lara discussed his multi-pronged approach to the insurance crisis — with companies decreasing coverage, raising premiums for residential and commercial customers, or leaving the state altogether. Part of the plan includes speeding up the state’s reviews of insurance companies’ proposed rate hikes — which are supposed to take 60 days, but often take as long as 18 months, by which time rates might not reflect the risk anymore. 

“This was completely ignorant on my part as a new insurance commissioner. I’m like, ‘Okay, we’re reviewing these rates. We’re done, right?’ They’re like, ‘Oh no, there is a whole backlog,’” he said during the hour-long CalMatters event in Sacramento, adding that companies often submit another rate review immediately after one is done because of the long wait times. 

Another significant change Lara is pushing to make insurance more available: For California to come out of the “dark ages” to join other states in allowing insurance companies to do “catastrophe modeling.” That would allow them to take projected losses into account – not just historical information — using data such as frequency, severity, damage and loss from wildfires and other natural disasters. Insurers can start using the modeling to set rates next year.

While companies are allowed to keep the modeling private, Lara promised there will be safeguards in place to ensure data and transparency. 

“We’re doing this from scratch,” he said. 

Lara also wants to tackle problems with the FAIR Plan — a “last resort” insurance plan required by state law that offers minimum coverage for wildfires. His plan is to raise the amount of coverage. Run by a pool of insurers, the FAIR Plan has grown to 400,000 policies. 

While he worries about “Armageddon” scale disasters, Lara said the recent flurry of wildfires in Southern California don’t undermine his proposals, noting that he issued emergency declarations to protect 750,000 policyholders from losing coverage. 

“I’m so confident in my plan,” he said. “I know it’s going to work.” 

But consumer groups and Lara’s predecessors as insurance commissioner have expressed concerns that his plan favors insurers.

What’s not in Lara’s proposals? Requiring insurers to address climate change in the regulations. 

“My immediate goal is to stabilize this market now, to get insurers to come back, to grow, and then we’re going to be having conversations on separate issues, separate requirements that we can look at,” he said. 

The post Why Ricardo Lara says his plan to fix California’s insurance crisis will work appeared first on The Hemet & San Jacinto Chronicle.

Insurance industry representative Rex Frazier argues that state leaders have the right idea: Burdensome regulations are making a difficult situation worse. But consumer advocate Jamie Court contends that the state needs to take a harder line by requiring coverage of homeowners who meet fire protection standards.

As the leader of an association of homeowners’ insurers, I frequently hear from anxious Californians who are losing their coverage and wondering whether the situation will get better. My answer is that I am not one of those who believes California is facing an uninsurable future. The problems we face are difficult but solvable.

The insurance challenges the state is facing today have roots in the past. While the giant wildfires of 2017 and 2018 had a huge impact, requiring insurers to pay claims equivalent to more than 20 years of profits, the state’s insurance problems predate the fires. California’s failure to update the old rules governing insurance rates have long prevented insurers from preparing for a hotter, drier future.

California’s laws are a national outlier. The rules for projecting wildfire losses, a crucial aspect of calculating insurance rates, are a case in point. California is the only state in the country that requires property insurers to project future wildfire losses based on average wildfire losses over the last 20 years, regardless of where they plan to do business. Every other state allows insurers to base their rates on where they intend to sell insurance, taking into account the degree of fire risk to the properties they plan to insure.

California is also a national outlier on rate approval in that it’s a “prior approval” state. That means an insurer must receive approval from the California Department of Insurance before it may increase or decrease rates.

While California law promises a 60-day approval period, it often takes six months or more to get permission to change rates. At times of high inflation, slow approvals require insurers to leave the highest-risk areas or face financial ruin.

A less visible but nevertheless critical issue is the financial well-being of the FAIR Plan, a pool of insurers providing last-resort coverage. The FAIR plan is growing well beyond its ability to pay claims for large fires. And if it runs out of money, it will charge insurers, as members of the pool, a fee in addition to claims from their own customers for the same fire. If that fee gets large enough, it could devastate insurers. We must address this.

Fortunately, Insurance Commissioner Ricardo Lara has recognized the need to fix these problems. His Sustainable Insurance Strategy would update California’s rate regulations and approval process while requiring insurers to make commitments to cover high-risk areas. The proposal is far from perfect, but we look forward to working with all the interested parties to increase insurance availability and restore the health of the market.

While state regulations and processes can be changed, we remain vulnerable to forces that are beyond our control. Inflation makes repairing and rebuilding homes much more expensive, driving up rates. Longer dry seasons increase the chances of devastating fires, having the same effect in the short term. We need a system that acknowledges these realities.

But raising rates is not a long-term solution. Reducing them over time will require consensus on how to handle combustible fuels near valuable property.

That will take a lot of time and effort. California homeowners’ insurers are ready to do our part to secure an insurable future for the state.

Rex Frazier is the president of the Personal Insurance Federation of California.

Home insurance companies have put Californians in a bind by refusing to sell new policies or renew many customers, leaving them with few coverage options. That has driven more homeowners into the high-cost, low-benefit FAIR Plan, a pool of insurers required to provide last-resort coverage.

Gov. Gavin Newsom recently announced legislation to allow insurance companies to hike rates more quickly in an effort to woo them back to the state. While that will certainly leave Californians paying higher rates, it’s not likely to get more people covered.

Insurance companies are refusing to write new policies despite substantial recent rate hikes — an average of 20% for State Farm and 37% for Farmers, for example. What has them spooked is greater exposure through the FAIR Plan, which increasingly covers expensive homes in wildfire-prone areas. Insurers are on the hook for FAIR Plan claims, and their exposure increases with market participation, so they limit their participation.

Only freeing people from the FAIR Plan will solve this. The most practical way to do that is to require insurers to cover people who harden their homes against fire. We have mandatory health and auto insurance, so why shouldn’t we have it for homes that meet standards?

Hardening is expensive enough that most homeowners are unlikely to do it without guaranteed coverage. Mandating insurance is therefore the best way to mitigate wildfire risks.

Mitigation efforts are already working, with major claim events dwindling in recent years. Moreover, insurers recovered billions from the utilities responsible for major fire losses in 2017 and 2018.

The current crisis was precipitated not so much by wildfires as by investment losses and rising construction costs. Insurers responded by tightening underwriting and raising rates.

Insurance companies got their hikes, but they refuse to write new business here until they get more. Unfortunately, Newsom and Insurance Commissioner Ricardo Lara are ready to give them what they want.

Last week, Lara proposed regulations attempting to address the crisis. Echoing a legislative proposal that failed last year, they would allow companies to raise rates based on black-box climate models. Florida tried a similar approach, and its rates are now about double California’s. Florida’s insurer of last resort covers 20% of its homeowners, roughly five times the share in California.

The proposed regulations purport to require insurers to increase sales to homeowners in “distressed areas” by 5%. However, they would not require them to charge prices consumers can afford. The requirement to cover these areas could also be waived if an insurer shows it’s “taking reasonable steps to fulfill its insurer commitment.” And the plan gives companies two years to comply but lets them start charging all policyholders higher rates immediately.

Newsom cheered the proposal, essentially arguing that California’s insurance rates are too damn low. He didn’t mention that California insurers’ profits have generally outpaced the national average over the last 20 years.

Newsom’s latest legislative proposal would limit public participation in rate-setting by cutting out so-called intervenors such as Consumer Watchdog, which can challenge unnecessary increases and has saved consumers more than $6 billion over 22 years.

Throwing more money at insurers won’t end the crisis; requiring them to cover responsible homeowners will.

Jamie Court is the president of the nonprofit Consumer Watchdog.

The post With fires burning again, is California becoming uninsurable? appeared first on The Hemet & San Jacinto Chronicle.