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.

Jane Kim, a former San Francisco supervisor, is betting that California voters are hungry for the kind of political upheaval that recently propelled Zohran Mamdani to the New York City mayor’s office and pushed Abdul El-Sayed into a competitive U.S. Senate race in Michigan. She’s making that bet even though the California Democratic Party has thrown its support behind her rival, state Sen. Ben Allen of Santa Monica.

How the race plays out may hinge on several factors: how much attention voters pay to a down-ballot office many people know little about, how much weight disillusioned Democrats give to the party’s official endorsement, and how voters respond to the wave of mailers and advertisements likely to arrive before the November election.

Kim and Allen are competing to become the state’s next insurance regulator, a job that oversees California’s massive insurance market. Kim wants to create a state-run natural disaster insurance program available to all residents and expand low-cost auto insurance to every driver in California — proposals that echo progressive priorities like Medicare for All. Allen, by contrast, is focused on stabilizing and strengthening the existing private insurance market, which has struggled for years with availability and affordability problems driven largely by wildfire risk and a string of catastrophic, deadly fires.

Kim’s pitch appears to be resonating. She led the June primary field of 11 candidates with more than 27% of the vote, while Allen finished second with just over 19%.

“Kim and Allen represent a microcosm of the split happening within the Democratic Party nationally,” said Shauhin Talesh, a UC Irvine law professor who studies insurance and consumer protection. “Both agree insurance companies should be regulated. The real question is how aggressively California should intervene, and what role government should play.”

Allen recently secured the California Democratic Party’s official endorsement — a development Talesh said wasn’t surprising, given that the senator is widely viewed as the more establishment-friendly candidate.

Kim, whose past accomplishments include securing free community college for San Francisco residents and helping create the state’s first $15 minimum wage, previously led the California Working Families Party, a progressive-aligned political organization. She has also picked up the endorsement of U.S. Sen. Bernie Sanders, having worked on his 2020 presidential campaign.

“Is this going to turn into another situation where voters push back against the establishment through their ballots?” Talesh asked. “At what point does the Democratic Party take notice?”

Kim’s challenges extend beyond the lack of a party endorsement. The insurance industry has voiced skepticism about her plans to expand the state’s role in the insurance market, and even some consumer advocacy groups have raised concerns — including Consumer Watchdog, whose founder helped write the 1988 ballot initiative that established California’s current insurance regulatory framework.

Jamie Court, the group’s president, warned that a state-run disaster insurance fund — which Kim says would be financed through a portion of premiums policyholders already pay — would require tens of billions of dollars just to get off the ground, and could be wiped out by a single catastrophic wildfire.

Kim has acknowledged her proposal needs further study but argues that critics are overlooking the need for broader public debate and greater community input on reforming the system.

“I don’t think letting insurance companies keep raising rates is the answer,” Kim told CalMatters in an interview. “People will lose their homes or go without coverage entirely. And that will devastate the economy.”

Allen, for his part, told CalMatters that his opponent’s disaster fund proposal “is effectively a massive subsidy for wealthy homeowners,” since their properties are more expensive to rebuild after a fire.

Maurice Mitchell, national director of the Working Families Party, said Kim’s momentum reflects “a populist wave, not necessarily a progressive one,” sweeping the country. He noted that early results showed Kim performing well not just in liberal strongholds but in traditionally conservative areas like the Inland Empire and Central Valley, as well as in Los Angeles County — which includes Allen’s own district.

Given those results, Jorge Contreras, the Working Families Party’s California director, called the state Democratic Party’s endorsement of Allen a sign of being “out of touch with reality.”

Some Kim delegates complained that their votes hadn’t been properly counted during the endorsement process, prompting Kim to request a recount.

“The votes were counted,” said Robin Swanson, a spokesperson for the party. “And recounted. The outcome was the same.”

Contreras noted that the California Labor Federation endorsed Kim the very next day.

Not everyone agrees with the “moderate” label often attached to Allen — including at least one of his own supporters.

“Ben is a progressive through and through,” said RL Miller, former chair of the California Democratic Party’s Environmental Caucus, who also runs the political action committee Climate Hawks. While the group doesn’t typically weigh in on California races, Miller said she personally backs Allen.

“He has supported us and authored landmark climate legislation over the years,” Miller said, adding that “the tribal nature of Democratic politics these days” may explain why Allen gets cast as the more moderate option.

Allen does have a substantial environmental record, including work on Proposition 4, the $10 billion bond measure voters approved in 2024 that includes wildfire prevention funding. He also authored legislation aimed at reducing single-use plastics.

Allen’s voting record has also aligned closely with some of the same groups now backing Kim, including the California Labor Federation. According to CalMatters’ Digital Democracy database, his legislative history generally has not sided with business interests.

Although both candidates have pledged not to accept campaign money from the insurance industry, Contreras said it’s worth tracking where their funding actually comes from.

Business groups spent $1.5 million opposing Kim’s primary campaign, according to Digital Democracy, with most of that money coming from JOBSPAC, an employer coalition backed by the California Chamber of Commerce.

Meanwhile, Contreras pointed out, “Ben Allen has taken cryptocurrency money, which clearly paid off for him in the end.” Campaign finance records show that Ripple co-founder and billionaire Chris Larsen donated $1 million in May to a PAC sponsored by California Environmental Voters — the largest outside contribution supporting Allen’s campaign.

Contreras predicted that billionaires will continue pouring money into moderate candidates this election cycle. “Why? Because they want things to stay the same. Now Jane is going to be painted as the villain.”

Kim’s largest campaign donors are the California Working Families Party and the California Teachers Association, which have contributed roughly $365,000 and $150,000, respectively.

One key difference between this race and similar contests unfolding elsewhere in the country is that many California voters simply don’t know what the insurance commissioner actually does, said Kevin Liao, a Democratic political consultant who briefly worked on Allen’s campaign before joining Tom Steyer’s gubernatorial primary bid.

That knowledge gap could push voters toward shortcuts — relying on endorsements, like Sanders backing Kim or the state party backing Allen, to make up their minds. Liao said the race may ultimately come down to which candidate does a better job persuading undecided voters directly.

“We’re at a moment where voters — certainly the Democratic Party’s base — are fed up with party leadership,” Liao said.

Still, progressive candidates haven’t always found success this cycle. In California’s gubernatorial primary, progressive contender Tom Steyer failed to advance to the general election. And in Wisconsin, moderate Democrat David Crowley recently defeated democratic socialist Francesca Hong in that state’s gubernatorial primary by less than a single percentage point.

Original source: CalMatters

The post Will California Voters Back a ‘Progressive’ Candidate for Insurance Commissioner? appeared first on The Hemet & San Jacinto Chronicle.

Her building didn’t burn, but thick smoke settled into it for days during the January 2025 firestorm. Before bringing her two children — one in college, one 12 years old — back inside, Barel wanted assurance the unit was truly safe. An independent test she paid for turned up toxic residue. Now she’s waiting on additional testing her landlord must conduct under a new California law.

Her landlord did have the apartment cleaned back in March, but Barel says the job was surface-level at best. She later found personal belongings tucked behind furniture and under the sofa — evidence, she said, that floors and walls were never properly scrubbed.

“The issue is that I have no control,” Barel said. “It really depends on the conversation between my landlord and their insurance company. If the landlord does the minimum, or if they don’t feel the need to fight or be insistent on certain things, then it’s not going to happen.”

Barel’s situation reflects a broader truth about California’s property insurance market: its stability — or lack thereof — doesn’t just affect homeowners. Renters, who make up roughly 44% of the state’s population, feel the ripple effects too, whether through rent hikes, housing shortages, or delays in rebuilding after disaster strikes.

This November, Californians will choose a new insurance commissioner, a position expected to play a significant role in both the recovery from last year’s devastating Los Angeles County fires and the broader health of the state’s insurance market.

Barel carries her own renters policy, which costs her $114 a year thanks to a multi-policy discount. So far, her insurer has paid out $6,000 in loss-of-use coverage — money meant to cover extra living expenses for displaced tenants — along with $2,100 toward damaged personal property. She recently completed a full inventory of her belongings, which she plans to submit toward her policy’s $35,000 cap for personal items.

“I was stuck for a long time,” she said. “It’s extremely overwhelming. There are a lot of personal things. These are our stories. This is our life.”

Her renters policy didn’t cover the cost of hiring an industrial hygienist to test her unit — a step she took on her own. That testing found elevated levels of lithium, chromium and other heavy metals, likely tied to smoke and ash from the fire. Because the blaze burned through the wildland-urban interface, the report noted, smoke in such fires often carries a more toxic mix of chemicals and particulates than typical structure fires. The hygienist recommended further testing and a deeper cleaning.

After enlisting help from the city of Pasadena to pressure her landlord, Barel is hopeful she’ll soon be able to leave the rental unit in Lincoln Heights where she’s been staying since the fire. FEMA has been covering that temporary housing, but that assistance is scheduled to run out in October, adding urgency to her situation. Throughout it all, she has continued paying rent on her original apartment.

“It’s not a possibility for me to move elsewhere,” she said. “We have rent control. It was perfect for the kids when we moved in. It had a courtyard; it was near the schools; everything.”

In nearby Altadena, which absorbed the worst of the Eaton Fire’s destruction, tenants made up 22% of households, and more than a third of the rental market operated under rent control, according to research from the UCLA Latino Policy and Politics Institute. Researchers found that renter households in Altadena generally earned far less than homeowner households before the fire — and were more vulnerable to seeing what should have been temporary displacement turn into long-term housing instability.

Renters insurance

California doesn’t mandate renters insurance, though many landlords require tenants to carry their own policies.

Emily Rogan, senior program officer with the consumer advocacy group United Policyholders, urges renters to get coverage precisely because of situations like Barel’s.

“Renters insurance buys you a deep breath as you think about where to go next,” Rogan said, noting how many difficult decisions displaced renters face after a disaster.

She also pointed to a shifting political landscape around disaster aid. “In the current political climate, there’s a trend where FEMA declarations are not as frequent as they used to be,” she said — meaning less federal assistance may be available when disaster strikes.

With inflation driving up the cost of replacing nearly everything, Rogan said renters insurance remains valuable “even if you fall under the camp of ‘Oh, my stuff’s not worth much.'”

Insurance’s ripple effects on rent and housing supply

Interviews with an insurance broker, an affordable-housing operator and several landlords revealed a mixed and often frustrating picture of California’s insurance market, which continues to strain under wildfire risk, rising litigation costs and insurers pulling back from writing new commercial policies.

Robert Guerrero, an insurance broker based in Madera County, said Mercury Insurance has resumed offering new policies in several counties — though not in the areas where his clients are located. Some property owners are turning to non-admitted carriers, insurers not licensed or backed by the state, which means policyholders bear more risk if the company fails. The California Department of Insurance maintains a public list of these so-called surplus-line insurers, and customers who choose to buy from one must sign a disclosure acknowledging the added risk.

“It’s still very dicey out there,” said Guerrero, whose firm handles homeowner, auto, commercial and life insurance policies.

Mike Placido, who owns four rental units in San Gabriel and a duplex in Alhambra, spoke with CalMatters two years ago about how rising insurance costs were squeezing landlords and tenants alike. Since then, he said, premium increases have slowed to a more manageable pace.

“It’s not causing me to raise rents as dramatically as I did before,” Placido said. “I guess the market has stabilized.”

He still carries a couple of policies through State Farm, but relies on non-admitted carriers for the rest — a situation that leaves him uneasy.

“There’s some aspect of safety when you’re going with a big company,” he said. “You don’t know if a smaller insurance company will be around long term.”

Uwe Karbenk, co-owner of a 33-unit apartment complex in San Bernardino, said his outlook hasn’t improved much. His premiums dipped slightly last year but have since climbed back to where they were two years ago. He raised rents in 2024, held them steady in 2025, and plans another increase this year.

Karbenk said he’s invested hundreds of thousands of dollars in electrical upgrades and a new roof for the building — improvements that, so far, haven’t translated into lower premiums.

For fire coverage specifically, he said insurers are scrutinizing properties far more closely. “They really check the building and they will write you up for stuff they don’t like. They call it recommendations, but it’s a stipulation. You need to do it, otherwise you risk cancellation of insurance.”

His takeaway: “Repairs are so much more expensive and replacement costs are so much higher. There’s no way around paying much more for insurance.”

Affordable housing developers are feeling similar pressure. Little Tokyo Service Center, a Los Angeles-based community development nonprofit that manages more than 1,000 affordable housing units across the region, has watched its insurance costs balloon in recent years.

Between 2023 and 2024, the organization’s annual insurance bill jumped from roughly $800,000 to $2.7 million, according to Erich Nakano, the group’s former executive director and current director of special projects. Deductibles that once ranged from $10,000 to $50,000 climbed past $100,000.

To cope, the organization has had to dip into its financial reserves, since raising rents significantly isn’t an option for affordable housing tenants. Last year, Little Tokyo Service Center joined an insurance captive — a self-insurance pool made up of roughly 40 organizations nationwide, including for-profit real estate firms, banding together to share risk.

“It’s an existential crisis,” Nakano said. “We can’t sustain these levels of insurance premiums.”

For the record: Barel currently resides in Lincoln Heights, not Altadena.

Original source: CalMatters

The post Renters and Landlords: Why Insurance Coverage Matters More Than Ever in California 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.