The move comes nearly two years after the devastating Los Angeles County fires left thousands of residents in limbo. While their houses may still be standing, many survivors have been unable to move back in, citing lingering smoke contamination and prolonged disputes with insurance companies over who is responsible for testing and remediation costs. According to the California Department of Insurance, the January 2025 fires generated more than 13,000 smoke-damage claims alone.

Newsom traveled to Altadena to sign the legislation, meeting with Eaton Fire survivors who have been pushing for clearer rules on how insurers must handle these claims. “These new protections will make insurer obligations clearer and give homeowners more financial flexibility when they need it most,” the governor said. The new laws take effect Jan. 1.

One of the centerpiece measures, Assembly Bill 1642, was authored by Assemblymember John Harabedian, a Pasadena-area Democrat. It orders the state’s Department of Toxic Substances Control to develop formal standards for testing, repairing and removing lead and asbestos contamination by the end of 2028, with similar rules for other toxic substances to follow by the end of 2029. Until those standards are finalized, existing federal and state guidelines on lead and asbestos exposure will remain in effect.

A companion measure, AB 1795, establishes a legal presumption that smoke damage found within a designated fire zone was caused by that fire — shifting the burden of proof away from homeowners. The law also requires insurers to cover testing and cleanup costs in line with the forthcoming state standards.

“For homeowners who have already lost so much in a fire, the last thing a family should have to do is fight for a clear answer about whether it is safe to return home,” said Assemblymember Mike Gipson, a Carson Democrat who authored AB 1795.

The legislation arrives amid mounting legal pressure on insurers. The state Department of Insurance, Los Angeles County and individual fire survivors have all taken legal action against State Farm and the state’s insurer-of-last-resort, the FAIR Plan, accusing them of mishandling smoke-damage claims. Just last week, Los Angeles County opened a separate investigation into Farmers Insurance over similar allegations.

Newsom also signed two additional bills authored by Harabedian addressing the financial strain faced by displaced homeowners. AB 1842 creates a statewide mortgage forbearance program for residents whose homes are declared uninhabitable following a major disaster, barring lenders from imposing late fees or penalties while payments are paused.

AB 1847 goes further for survivors of the Los Angeles County fires specifically, extending mortgage forbearance eligibility to 24 months and pushing back the deadline for homeowners to request forbearance to Jan. 7, 2029.

Original source: CalMatters

The post California Becomes First State to Set Standards for Smoke Damage in Homes appeared first on The Hemet & San Jacinto Chronicle.

The insurance commissioner may sound like an obscure regulatory title, but the job carries enormous weight. The commissioner runs the California Department of Insurance, which regulates homeowners, auto, life, health and workers’ compensation coverage, among other lines. It’s the commissioner’s job to make sure policies remain available, premiums stay within reason, and insurance companies actually follow through on what they promise policyholders.

Those responsibilities hit especially close to home for Californians as wildfire risk and other climate-driven disasters intensify. Seven of the state’s 10 most destructive wildfires have struck within the last decade. At the same time, residents are grappling with rising costs across the board, insurance premiums included — and it’s the Department of Insurance that signs off on those rate hikes.

Most states appoint their insurance commissioner, but California is one of 11 where voters elect the position directly. The current commissioner, Democrat and former state legislator Ricardo Lara, has held the office for eight years. State Sen. Ben Allen and former San Francisco Supervisor Jane Kim, both Democrats, are now vying to replace him when his term ends in January.

Whoever wins will have to balance competing interests — consumers, insurance companies, consumer advocacy groups, wildfire survivors and more.

“The job isn’t to be a friend or an enemy to anyone, except to be a friend to the California consumer,” said Lucy Wang, a former special counsel at the Department of Insurance during Lara’s tenure. Wang left the department late last year and now works as a senior attorney at a San Francisco law firm, where she represents insurers on regulatory matters and litigation.

CalMatters spoke with experts including Wang, consumer advocacy groups and Lara’s predecessor about what the commissioner can — and can’t — actually do.

Lara declined to be interviewed for this story. Department of Insurance spokesperson Michael Soller offered this statement instead: “Guided by an unprecedented level of communication with the public across the state, [Lara] used executive power to overcome entrenched opposition from every sector and modernize insurance regulation to confront the climate crisis.”

**Setting Policy and Rules**

The commissioner sets policy and rolls out new regulations, many of which reach directly into consumers’ wallets — either through the rulemaking process or by working alongside state lawmakers to craft legislation.

Several years ago, a string of massive, deadly wildfires drove a wave of costly claims, prompting some insurers to stop writing or renewing policies in California altogether. Companies argued the rates they were allowed to charge didn’t reflect actual risk, and that the Department of Insurance was too slow approving rate increases. State lawmakers tried to pass legislation addressing the problem but failed. Gov. Gavin Newsom then issued an executive order directing Lara to fix it. Last year, Lara put new regulations in place that borrowed from those failed bills — including provisions the insurance industry had been pushing for a long time.

The new rules let insurers factor catastrophe modeling — which accounts for future risk, not just historical data — and reinsurance costs into their rate-setting. In practice, that means most Californians will see their premiums climb, if they haven’t already. The department is also trying to speed up its review of insurers’ rate-increase requests.

Lara’s department and the insurance industry both say the commissioner’s so-called sustainable insurance strategy is beginning to show results. Some companies have resumed writing policies in the state, though the department says it doesn’t yet know how many of those are genuinely new customers, according to Soller.

The FAIR Plan — a last-resort program that pools insurers required to sell fire coverage to homeowners who can’t get it anywhere else — has swelled in recent years as insurers pulled back from the market. That growth has slowed recently, which the department points to as another sign its new rules are working. As of June, the FAIR Plan still had nearly 700,000 active policies, up 8% from September 2025 and 157% from September 2022.

Another new rule that recently took effect concerns the role of “intervenors” in insurance rate reviews. Under Proposition 103, the ballot measure that governs California insurance law, any resident can intervene — hence the term — to challenge an insurer’s request for a rate hike, and get compensated for doing so. The consumer group Consumer Watchdog, founded by the author of Prop 103, has long been the state’s leading intervenor. The group says it saved Californians $6.4 billion between 2002 and 2024.

“The intervention process is an additional check to keep insurance prices from spiraling upward,” said Will Pletcher, an attorney with Consumer Watchdog. He added that insurance companies “will always be able to outspend consumers,” and that the intervention process gives the public a way to scrutinize proposed rates.

Average annual homeowners insurance premiums in California — a state with some of the priciest real estate in the country — rank in the middle nationally but have jumped 23% since 2023, according to an analysis by the comparison site Bankrate.com.

Lara’s new rule requires intervenors to make a substantial, distinct contribution to the department’s work, and that contribution must actually lead to a changed decision or other department action. Thirty-two consumer, labor and public advocacy organizations oppose the change. They argue it will make it harder for intervenors to get paid — Consumer Watchdog’s compensation totaled $14.2 million between 2002 and 2024 — and could discourage challenges to insurer rate requests, potentially leading to higher premiums for Californians.

Lara and the group have a long history of friction; Consumer Watchdog has raised questions about his ties to the insurance industry and pushed him toward greater transparency.

“The current commissioner is trying to punish [founder] Harvey [Rosenfield] and Watchdog, and that’s how we ended up with these absurd rules,” said Robert Herrell, executive director of the Consumer Federation of California, another advocacy group that occasionally intervenes in rate cases.

Herrell, who previously worked at the Department of Insurance, said relying solely on the department’s internal expertise isn’t ideal. “An outside perspective can bring fresh thinking,” he said.

Lara has also proposed a rule the insurance industry doesn’t love: requiring companies to submit their solvency risk management plans to the department.

Wang, the former department attorney, helped draft it. She said the goal is giving the department as much information as possible to keep the insurance market stable.

Insurers are already required to share financial information with the National Association of Insurance Commissioners. Industry representatives argued in public comments in July that the new rule would be redundant and burdensome, requiring new expertise and expense.

Some consumer and civil rights groups, including Public Citizen, support Lara’s proposed rule. In its public comments, a Public Citizen representative urged the department to go further — for instance, by setting specific requirements for how insurers report climate-related risks.

In another example of how the commissioner’s authority directly affects consumer costs, a California appeals court ruled in July to uphold Lara’s right to continue allowing insurers to use a driver’s marital status as an optional factor in setting auto insurance rates. That practice dates back to 1996, under regulations added by former Commissioner Chuck Quackenbush. Consumer groups have found that single drivers tend to pay more for auto insurance as a result. The case is expected to be appealed and could eventually land before the California Supreme Court.

**Holding Insurers Accountable**

The commissioner has the power to scrutinize how insurance companies behave and demand changes, or to work with the Legislature to write new laws forcing their hand.

After the 1991 Oakland Hills tunnel fire, many homeowners discovered their coverage fell short. Then-Commissioner John Garamendi pressured insurers into providing an additional $300 million in coverage. Now a member of Congress, Garamendi was seen as a fierce consumer advocate who regularly butted heads with the insurance industry — a strategy that worked in some cases and fell flat in others.

Survivors of the January 2025 Los Angeles wildfires, many of whom are still trying to rebuild their lives, called for Lara’s resignation late last year. Frustrated by delays in claims processing, they accused the Department of Insurance of failing to deliver the help they needed in the aftermath.

“Fire survivors are absolutely right that they’re being treated unfairly,” said Amy Bach, executive director of the consumer advocacy group United Policyholders. But she added that the department has limited power over many insurance industry practices, such as assigning multiple adjusters to survivors, and it cannot settle disputes between policyholders and their insurers.

“The reality is [the department] can’t step into the shoes of a private attorney,” Bach said.

Even so, Lara’s predecessor, Dave Jones, said the commissioner should take more aggressive enforcement action against insurers.

“I think it’s important to have a commissioner who’s willing to exercise the authority the law gives them, and who is independent — not just from the influence of the insurance industry, but from the governor and the Legislature as well,” Jones said.

Lara’s department investigated how State Farm handled claims from last year’s Los Angeles County wildfires. In May, the department found that State Farm had broken the law — among other things, by delaying payments and underpaying claims — and recommended multimillion-dollar fines along with a possible one-year suspension. Yet the department still hasn’t scheduled a hearing on the matter, and late last month, fire survivors filed a lawsuit against Lara and the department, asking for a judge to be assigned to the case and seeking to participate as intervenors.

The Department of Insurance also took legal action against the FAIR Plan, accusing it of denying smoke-damage claims following the Eaton and Palisades fires. Smoke damage can be harder to detect, and there are no established assessment standards — though two bills recently passed by the Legislature aim to set standards that would be the first of their kind nationally.

The department reported that survivors of last year’s fires filed roughly 13,000 smoke-damage claims. Lara ordered the creation of a task force to study those claims, and the group released its recommendations earlier this year. Some of those recommendations made their way into the bills now sitting on the governor’s desk, including a requirement for testing to detect toxic materials, which would affect what insurance is required to cover. Lara backed Assembly Bill 1795; the other measure is AB 1642.

Wildfires represent the biggest challenge facing the commissioner right now, but the job touches on many other insurance issues as well. Earlier in his tenure, Lara dealt heavily with health insurance, as Covered California, the state’s health insurance marketplace created under the Affordable Care Act, was still getting off the ground.

The commissioner can review health insurance policies and proposed rate changes but cannot block rate increases outright — despite Jones’ earlier push to expand the office’s authority to do exactly that.

Still, Jones worked to exclude certain insurers from the small-business health insurance marketplace, arguing they showed patterns of excessive rate hikes. He and other consumer groups also succeeded in capping what Covered California beneficiaries had to pay out of pocket for specialty drugs, a move that put him at odds with then-Gov. Jerry Brown’s administration.

“That made a lot of people angry with me, but it was the right thing to do,” Jones said. “We need a commissioner willing to do that.”

Original source: CalMatters

The post What California’s Insurance Commissioner Does — and How It Affects Your Wallet appeared first on The Hemet & San Jacinto Chronicle.

Two companion bills now sitting on the governor’s desk aim to answer a question that has plagued thousands of Southern California households since January 2025: When is it actually safe to move back home?

The Eaton and Palisades fires destroyed more than 16,000 structures and burned for nearly a month, sending up a toxic haze of burning trees, brush, plastics, metals and other manufactured materials. According to the state Insurance Department, more than 13,000 of the roughly 40,000 claims filed after the fires involved smoke damage rather than total loss.

Nearly two years later, many residents whose homes survived the flames still haven’t moved back in. They describe walking into houses that reek of smoke, coated in ash, soot and char, while they wait — often for months — on test results for lead, asbestos and other contaminants. Getting insurers to pay for cleanup and repairs has, for many, become its own ordeal. Survivors, remediation experts and even insurance representatives have all pointed to the same root problem: there simply are no statewide rules spelling out what constitutes safe, adequate smoke-damage remediation.

Assembly Bill 1642, authored by Assemblymember John Harabedian, a Pasadena Democrat, is designed to close that gap. Harabedian said the measure would establish “a first-in-the-nation standard for testing and remediation” — essentially, clear rules for identifying contamination and fixing it.

The bill works hand-in-hand with Assembly Bill 1795, written by Assemblymember Mike Gipson, a Gardena Democrat, which would require insurance companies to actually follow those new standards once they’re in place. Neither bill can become law without the other, and Gov. Gavin Newsom has until the end of the month to decide on both.

“We were hearing from survivors that they weren’t getting a fair shake from their insurance companies,” Harabedian said. “Kudos to survivor groups that worked with us on this. We hope others don’t have to go through what they went through.”

The two measures are part of a broader package of post-fire legislation aimed at insurance companies, whose handling of smoke-damage claims has drawn scrutiny from regulators and become the subject of lawsuits. State Farm, which covers roughly one-fifth of California’s property insurance market, and the state’s insurer-of-last-resort, the FAIR Plan, have both been accused by the Insurance Department of delaying and denying legitimate smoke-damage claims.

Last week, Los Angeles County sued State Farm, alleging unfair business practices in how it processed claims stemming from the 2025 fires. The lawsuit leaned heavily on findings from the Insurance Department’s own investigation, which found the company had denied or discouraged customers from seeking environmental testing and refused to reimburse policyholders who paid for testing themselves. The county also alleged that for homes still standing, State Farm often sent contractors who used cleaning methods that were inadequate — and in some cases unsafe.

State Farm spokesperson Sevag Sarkissian said the company “strongly disagrees” with the county’s characterization of its claims handling.

Kareem Ali’s home in Altadena is one of the few left standing on his cul-de-sac. But he and his wife still haven’t been able to live there. Since August, they’ve been staying in a donated RV parked on their property.

State Farm covered temporary housing for the couple from January 2025 through this past April, when the insurer stopped reimbursing them for an $8,000-a-month one-bedroom rental — one the company itself had recommended. Ali stopped paying rent after that, and three months’ worth is now overdue.

When it came to testing their smoke-damaged home, State Farm denied Ali’s request for environmental testing, so he and his wife paid $3,000 for it themselves. The insurer wouldn’t reimburse them and has since delayed or denied several cleanup claims — a process complicated, Ali said, by the fact that at least six or seven different adjusters have been assigned to their case over time.

“Every time we got some sort of momentum on our claim, they’d randomly switch,” he said.

Ali said the couple eventually spent through the money State Farm had provided for personal belongings, hiring contractors on their own to clean the home, remove insulation and replace carpeting. When they told the insurer more work was needed but they had run out of funds, the company denied the claim, he said. All the while, they’ve kept paying their monthly premiums. Ali said he’s asked their adjuster directly: “What are we paying for if we’re not going to get coverage?”

Elisa Jacobs Nixon and her family are in a similar bind. Months of disputes with State Farm over smoke-damage testing and cleanup have kept them out of their Altadena home as well.

Nixon paid $6,000 out of pocket for environmental testing in May 2025, results the insurer initially ignored. Her public adjuster — a private professional hired to advocate for policyholders during claims — suggested getting a contractor’s estimate based on those findings. That approach worked: within days, State Farm sent its own industrial hygienist to inspect the property, Nixon said.

Both her original report and the insurer’s follow-up testing turned up similar results, including elevated levels of several contaminants. The more recent test also detected asbestos.

Though her family remains displaced, Nixon said things finally appear to be moving in the right direction.

“This has completely hijacked my life, my kids’ lives, it’s just taken over everything,” she said. “That’s why these parameters (in the bills) are so important. My hope is this will spread across the U.S. and help disaster survivors everywhere.”

Under Harabedian’s bill, the state Department of Toxic Substances Control would be required to develop testing, repair and removal standards for lead and asbestos by the end of 2028, followed by standards for other contaminants — including heavy metals, cyanide and lithium — by the end of 2029.

Gipson’s bill would create a legal presumption that ash, soot, char or other combustion byproducts found in a standing home after a wildfire count as wildfire-related smoke damage for insurance purposes. It would also require insurers to inspect affected properties within 30 days of a claim, cover the cost of testing needed to restore homes to their pre-fire condition, and continue paying for temporary housing until repairs are complete.

Not everyone is on board. Karen Collins, a vice president at the American Property Casualty Insurance Association who also sits on the state’s smoke claims and remediation task force, said the industry remains “technically opposed to the bills.” While she acknowledged the legislation lays out a framework, she argued that any resulting regulations should “remain grounded in science.”

Public adjuster Brian Haden shares some of that skepticism, saying the bills are short on specifics and could end up being used as leverage by both survivors and insurers alike. He predicts litigation will remain the primary way disputes get resolved and questions whether the Insurance Department will have the teeth to enforce the new rules.

Jane Lawton Potelle, founder and executive director of Eaton Fire Residents United — whose data helped shape Harabedian’s bill — agrees the legislation won’t resolve every enforcement question. She also noted the new standards won’t take effect soon enough to help her or many current survivors directly. Still, she believes the mere fact that standards are coming could influence ongoing lawsuits and settlement negotiations.

“Insurers are relying on people not to know information,” she said. “I want people to know how to protect themselves and stop being afraid. Living in a contaminated home can make you sick. And it can devalue your property.”

Lawmakers also passed several other bills this session targeting insurer conduct more broadly, addressing complaints about payment delays and the practice of cycling multiple adjusters through a single claim.

Senate Bill 876 would require insurers to assign policyholders a single point of contact within 30 days of filing a claim, and to provide written notice any time a third adjuster is brought onto a case within a six-month span. It also mandates that insurers submit detailed disaster response plans to the Insurance Department by April 1, 2028, updated every two years or whenever the insurance commissioner requests it.

Senate Bill 877 would require insurers to include all preliminary and final calculations of loss amounts, covered damages and repair costs in claims documents provided to policyholders within 15 days of a request.

Senate Bill 878 would require insurers to pay out the cash value of a destroyed property within 30 days of it being declared a total loss, followed by the remaining replacement cost within 30 days of receiving the necessary documentation. Insurers that miss those deadlines would owe accrued interest on the amount owed.

Original source: CalMatters

The post California May Become First State to Set Smoke Damage Standards for Homes appeared first on The Hemet & San Jacinto Chronicle.

Think again.

Without a strong political opposition forcing them to close ranks, Democrats routinely splinter along lines of ideology, region, gender, ethnicity and — perhaps most consistently — competing economic interests.

At its core, the state Capitol still functions much like a marketplace, where various interest groups haggle over legislation that affects their bottom lines. That’s essentially how the late journalist Carey McWilliams characterized it back in 1949 in his book “California: The Great Exception.”

Since then, California has transformed dramatically — its population has exploded, its economy has been reshaped, and its politics have flipped from Republican control to Democratic dominance. Yet McWilliams’ observation still rings true, even as the players and interests jockeying for influence have changed.

The clearest recent example is the fight that consumed the final stretch of this year’s legislative session, ending in gridlock: the enormously costly question of who should pay when wildfires — now a grim constant in California life — cause destruction.

Many of the state’s most devastating fires have been traced back to power lines that fail during windstorms, including one of last year’s major blazes in Los Angeles County.

The investor-owned utilities that operate those lines — companies like Pacific Gas and Electric and Southern California Edison — have generally accepted some degree of financial responsibility for fire damage. But because they operate as state-regulated monopolies, determining exactly how much they should pay gets complicated.

These utilities provide an essential service, and state regulators are tasked with keeping them financially healthy enough to secure the capital and loans needed to keep the lights on.

That means payouts to wildfire victims can’t be so large that they threaten a utility’s financial footing — which, in practice, means ratepayers end up absorbing part of the cost, pushing already sky-high electricity bills even higher.

This debate has simmered in the Capitol for years. Gov. Gavin Newsom, now in his final year in office and widely seen as eyeing a potential presidential run, decided it was time to settle the matter once and for all.

As lawmakers were racing toward the end of the legislative session, Newsom put forward a plan that would cap utility liability for wildfire damage — a move that would shore up the companies’ finances but shift more of the burden onto fire victims and their insurers.

Predictably, the proposal drew swift backlash from victims’ advocates and insurance companies, reigniting another simmering crisis: the growing reluctance of insurers to write policies in California’s increasingly fire-prone landscape. Like utilities, insurers operate under state oversight, and regulators face similar pressure to keep the industry profitable enough to stay in the state.

Insurance companies and wildfire survivor groups mounted an aggressive campaign urging lawmakers to reject Newsom’s plan, framing it as a handout to utility companies. Facing mounting opposition, the governor ultimately backed off.

State Senate leaders then crafted a compromise that Newsom appeared to accept, albeit without much enthusiasm. But utility executives — joined by their labor unions — blasted the new deal, arguing it would weaken their companies’ financial stability. They pointed to a sharp drop in utility stock prices after Newsom’s original proposal collapsed as proof of the risk.

In the end, no agreement could be reached, and lawmakers wrapped up the session Tuesday without resolving the issue.

Newsom told reporters he isn’t ready to give up and left open the possibility of calling a special legislative session to revisit the matter.

But without buy-in from all sides, such a move would likely accomplish little.

Newsom will remain in office through the rest of the year, and lawmakers — including newly elected members from November’s races — will reconvene in December. By then, though, he’ll be operating as a lame duck, with a successor, most likely Xavier Becerra, already chosen to take his place.

Wildfire liability remains one of California’s most tangled political puzzles — a Gordian knot born from the state’s singular complexity. And as this latest standoff shows, one-party rule hasn’t made it any easier to untie.

Original source: CalMatters

The post California Democratic Leaders Wrestle With Wildfire Liability Issue, Reach No Resolution appeared first on The Hemet & San Jacinto Chronicle.

With just weeks left before lawmakers adjourn, Newsom’s administration has been quietly shopping a broad but still largely undefined set of proposals aimed at reducing how much money utility companies must pay out when their equipment sparks a wildfire. The effort has managed to unsettle nearly everyone with a stake in the issue.

Insurance companies have launched a statewide ad campaign warning that the plan amounts to a “utility bailout” that would strip them of their ability to recover costs from power companies after paying out policyholders’ claims. Attorneys who represent wildfire victims are bracing for cuts to their fees. Survivors fear they won’t be fully compensated for their losses and trauma. And local governments are pressing to ensure they still receive full reimbursement to rebuild roads, water systems and other infrastructure destroyed by fire.

On the other side of the debate are the state’s three major utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — which together serve roughly three-quarters of California and have faced intense criticism for sparking some of the state’s deadliest and most destructive fires.

None of the three companies appears to be in immediate financial distress; all reported rising profits last year. But wildfire-related costs have helped push California’s electricity rates to the second-highest in the nation, and officials in Newsom’s office and the Legislature worry that continued financial strain on utilities could drive prices even higher — or trigger a bankruptcy that would leave fire victims waiting even longer for compensation.

Newsom and his allies argue that utilities are currently held responsible for too much after a fire, creating an opening for hedge funds and other investors to profit by purchasing victims’ claims.

“The status quo doesn’t work,” Newsom said at a press conference last week when asked whether his proposal serves fire survivors’ interests. “We’re trying to balance all of those needs in a very familiar process that will unfold over the course of the next few months.”

When CalMatters asked the governor’s office to clarify that timeline — given that the legislative session ends in just three weeks — a spokesperson said Newsom meant the remaining weeks of this year’s session, but did not say whether he might call a special session to keep the effort alive beyond that deadline.

As Newsom weighs a potential run for president, he has political incentive to strike a deal. Critics on the right have used California’s disaster costs and affordability struggles as talking points, and further rate increases — or another utility bankruptcy — would only fuel that narrative. But aligning with the utilities carries its own risks. Anger toward the companies remains raw: just last week, Cal Fire and the Los Angeles County Fire Department determined that Edison equipment was responsible for igniting the January 2025 Eaton Fire, which killed 19 people in Altadena.

Assemblymember Cottie Petrie-Norris, an Irvine Democrat who chairs a key Assembly committee, has expressed general support for Newsom’s direction. Senate leaders appear more cautious. Wildfire survivors are urging lawmakers to slow down and hold the debate in public rather than behind closed doors.

“You cannot be ‘there are some bad actors’ and therefore we will have a secret bill,” said Joy Chen, who leads a coalition of Los Angeles-area fire survivors. “Then your bill is the bad actor.”

A familiar fight

This isn’t the first time Newsom has waded into this territory. He took office not long after devastating wildfires tore through Northern California in 2017 and 2018 — fires that investigators later linked to PG&E equipment.

At the time, PG&E faced a legal and financial crisis. Under California’s strict liability standard, utilities are responsible for wildfire damage tied to their equipment even when they weren’t found negligent, and regulators had stopped allowing companies to pass those costs onto ratepayers in cases involving carelessness. Facing a wave of lawsuits, PG&E filed for bankruptcy in 2019.

Newsom quickly signed legislation intended to shield utilities from future financial collapse, prompting accusations that the state was bailing out the industry. That law created a $21 billion wildfire fund — financed equally by utility shareholders and a $2.50 monthly surcharge on customers’ bills — meant to compensate victims, provided utilities meet stricter safety standards.

Then came the Eaton Fire in January 2025. During a powerful windstorm, electrical arcing from an aging, decommissioned Edison transmission tower ignited dry brush in Eaton Canyon. The fire, burning simultaneously with the deadly Palisades Fire, killed 19 people and destroyed nearly 9,500 homes and other structures. UCLA researchers estimated total losses between $24 billion and $45 billion.

The state’s wildfire fund is expected to be exhausted once insurance claims, Edison’s voluntary settlements and pending lawsuits are all accounted for. Lawmakers extended the fund last year, stretching the ratepayer surcharge through 2045 to help cover future disasters. Meanwhile, some hedge funds have moved to buy up insurance claims tied to the fires, hoping to profit from settlements.

Newsom’s plan seeks to narrow who can file claims against the fund and how much they can receive. According to a policy outline released Tuesday and private briefings held last week, his proposal would pair those liability limits with measures to expand home-hardening programs, help homeowners exit the state’s insurer-of-last-resort program, tie utility executive compensation to safety performance, and require utility shareholders to cover rate relief for customers during two upcoming summers.

Specific legislative language has not yet been released.

CalMatters reached out to all three major utilities for comment. San Diego Gas & Electric did not respond. PG&E and Edison directed questions to Nathan Click, a spokesperson for the utility-backed campaign Wildfire Victims First, which has flooded the state with advertising urging residents to pressure lawmakers to act. Click, who also does political work for Newsom, declined to answer specific questions — including whether utility representatives are negotiating directly with legislators — and instead provided statements from business groups and a major electrical workers’ union supporting the liability changes.

The chief executives of PG&E and Edison have also warned that they may take unspecified action to protect shareholders if lawmakers fail to reduce their wildfire liability exposure.

Over the past four years, the three utilities have spent a combined $5.2 million on political campaigns, lawmaker travel and charitable donations tied to elected officials, according to CalMatters’ Digital Democracy database. PG&E ranked among the top lobbying spenders in Sacramento during the current legislative session, and the three companies together spent nearly $7 million in the first half of this year lobbying the Legislature, the governor’s office and utility regulators.

Limiting damages

Newsom’s proposal seeks to reduce utility liability in several ways: capping attorneys’ fees, limiting how much local governments can recover for rebuilding public infrastructure, and restricting damages for certain categories of victims.

The plan includes a state-run “fast pay” system that would prioritize payouts to survivors who lost loved ones, suffered injuries or had their homes destroyed. But to use that system, claimants would likely have to forfeit their right to sue the utility — trading the possibility of a larger settlement through litigation for a quicker payment.

For other affected residents, the proposal floats a cap of $150,000 in damages.

Petrie-Norris, who supports the broader framework, said she does not want to restrict emotional distress claims for survivors she considers legitimate victims, but believes those claims should be limited for people who weren’t directly affected.

“If you were part of a disaster no one’s going to say you can’t make a claim,” she said. “If you did not actually experience a disaster, what non-economic damages should you be entitled to?”

Newsom and Petrie-Norris say they’re especially concerned about attorneys who solicit clients through advertising to sue utilities, noting that legal fees can consume 30% to 40% of a victim’s payout, according to one academic study. But advocates for survivors argue that determining who qualifies as a “real” victim isn’t so simple — someone who didn’t lose a home but suffered smoke inhalation from miles away, for instance, could still have been seriously harmed.

Chen said she was taken aback during a briefing with the governor’s office, when officials indicated that only people who evacuated and lost their homes would qualify for non-economic damages.

“Let’s say someone was out of town, but their house burned down so they didn’t evacuate,” she said. “But they lost everything, so they have to rebuild. So you won’t compensate them for pain and suffering?”

Newsom’s office has also said it wants to prevent investors from purchasing wildfire claims and prioritize small businesses over large corporations, though it hasn’t detailed how that would work in practice.

Graham Knaus, chief executive of the California Association of Counties, said he’s skeptical of the framing that some claimants are gaming the system.

“The utilities are finding a lot of creative ways to avoid responsibility. That’s it,” Knaus said. “We should not be opening the door for them to escape accountability.”

Shifting costs

Another element of the proposal could ripple across the state’s insurance market. Newsom is considering limiting — or eliminating — insurers’ ability to recover costs from utilities after paying out claims tied to utility-caused wildfires, a legal process known as subrogation.

Utilities and insurers have clashed over this issue for years. In 2018, utilities unsuccessfully pushed legislation to weaken California’s strict liability standard, which holds power companies responsible for wildfire damage near their equipment regardless of fault.

“We’re a well-resourced industry, but not like [the utilities],” said Rex Frazier, president of the Personal Insurance Federation of California. “Their lobbying spend was just crazy.”

Denni Ritter, vice president of the American Property Casualty Insurance Association, warned that eliminating subrogation could undercut progress made under insurance reforms California adopted last year to stabilize the market. Those reforms allowed insurers to factor catastrophe modeling and reinsurance costs into their pricing, prompting some companies to resume writing new policies statewide and slowing growth in the state’s FAIR Plan, the insurer of last resort.

Ritter and Frazier warned that if insurers can’t recoup wildfire-related claim costs from utilities, they’ll likely raise premiums broadly — even in areas with minimal fire risk.

“We don’t understand how they’re not embarrassed to suggest that the answer to their problem is to shift their costs over to other people,” Frazier said. “Why should a homeowners insurance customer in a dense urban environment have to pay considerably more?”

Sen. Ben Allen, a Santa Monica-area Democrat who chairs the Senate’s utilities committee and is running for state insurance commissioner, said he’s wary of that tradeoff unless the broader package includes clear benefits for consumers and taxpayers.

Petrie-Norris, however, said the exchange might ultimately be worthwhile.

“If I can save you $2 on your utility bill and your insurance bill goes up by $1, that seems like a smart thing for us all to do,” she said. “But we’ve got to make sure that’s true and whether there are unintended consequences.”

Original source: CalMatters

The post Newsom Pushes Last-Minute Plan to Shield California Utilities From Wildfire Costs appeared first on The Hemet & San Jacinto Chronicle.

Now, health experts fear a similar chain reaction could play out on a much larger scale. Deep federal and state cuts to Medicaid are projected to double California’s uninsured rate, pushing an estimated 2.2 million people off health coverage by 2030. While low-income residents who depend on Medi-Cal will bear the brunt of the damage, industry leaders warn that the pain won’t stop there — even Californians with employer-based or private insurance are likely to feel the squeeze.

“The way that everybody feels it is an inability to get access to the care they need when they need it,” said Carmela Coyle, president and CEO of the California Hospital Association.

Because the healthcare system is so interconnected, researchers say reduced services, declining quality of care and rising premiums could ripple outward to nearly everyone, not just those losing coverage directly.

How we got here

The rollback traces back to President Donald Trump’s tax legislation signed last year, which slashes federal Medicaid spending by close to $1 trillion over the next 10 years. State officials estimate Medi-Cal alone stands to lose about $30 billion annually as a result.

Under the new rules, many low-income adults will face work requirements and shorter windows to prove their eligibility — provisions that research shows tend to knock people off public assistance not because they’re ineligible, but because of paperwork and bureaucratic hurdles. California lawmakers have also trimmed state-funded health benefits for undocumented immigrants and refugees.

Bukola Olusanya, a street medicine provider with St. John’s Community Health in South Los Angeles, said the new work requirements will be nearly impossible for many unhoused patients to satisfy, even those who qualify for an exemption because of a disability.

“We’re talking about people that do not have access to a cell phone,” Olusanya said. “They don’t have access to internet. They don’t have access to a printer or paper or anything for them to complete the eligibility process.”

Anthony Wright, executive director of the advocacy group Families USA, said the combined cuts threaten to undo much of the coverage progress California has made over the last decade.

“From a pure dollars-and-cents point of view, it is the biggest rollback in coverage in history,” Wright said.

Hospitals absorb the first hit

Hospitals are usually the first to feel the strain, since federal law requires emergency rooms to treat anyone who walks in, insured or not. When more patients lose coverage, hospitals are left to cover the cost of their care. The California Hospital Association projects uncompensated care statewide will double, from roughly $2 billion to $4 billion a year. That’s a troubling prospect, Coyle said, given that more than half of California’s hospitals are already operating in the red.

When hospitals face financial strain, they typically respond by cutting costs in ways that touch every patient, regardless of insurance status — trimming staff, reducing wages, scaling back expensive service lines such as labor and delivery, or closing emergency departments altogether rather than absorbing more unpaid care. Some facilities, especially those already on shaky financial footing, could close entirely.

“If you don’t have as many (paying) patients, your income as an organization goes down,” said Nadereh Pourat, associate director of the UCLA Center for Health Policy Research. “These are nonprofit institutions, so all of that income goes toward delivery of care.”

Coyle noted that the Affordable Care Act had offered hospitals a financial lifeline by expanding Medi-Cal eligibility to millions of low-income Californians and creating a marketplace for middle-income residents to buy coverage. In the decade before that expansion took hold, 26 California hospitals closed outright, and another 22 shut down their emergency departments. Bracing for the new round of cuts, hospitals across the state have already laid off more than 3,000 workers.

Covered California feels the pinch

Nearly 2 million Californians with private coverage are already experiencing fallout from a separate but related decision: Congress’s refusal last year to extend roughly $3 billion in subsidies that helped middle-income families afford plans through Covered California, the state’s Affordable Care Act marketplace. Without that assistance, premiums spiked in January, prompting many enrollees to downgrade to skimpier plans.

Since the start of the year, about 140,000 people have already dropped their Covered California coverage, and researchers at UC Berkeley and UCLA expect another 176,000 to follow. State officials have also announced that premiums are set to climb by nearly 10% next year.

Charles Bacchi, president and CEO of the California Association of Health Plans, said rising costs tend to push healthier, lower-risk enrollees out of the insurance pool first.

“They’re the first ones to drop coverage because they start to question the financial bargain of the whole thing. Why am I buying this? The cost keeps going up and I don’t use it that much, so I drop it,” Bacchi said.

That exodus leaves behind a pool of sicker, costlier patients, which drives premiums even higher — a cycle insurers call a “death spiral.”

Will your premium actually rise?

For Californians who get coverage through their employer, there’s less consensus on exactly how much of this cost gets passed along. Research suggests hospitals typically absorb around 80% of the added expense created by rising numbers of uninsured patients.

“I don’t know if privately insured patients really get hurt, and I think that’s partly why Americans seem to be comfortable with the fairly inequitable arrangement we have,” said Tal Gross, a health economist at Boston University. His reasoning is that hospitals are generally already charging insurers close to the ceiling of what the market will bear, leaving little room to shift additional costs onto private plans. In some instances, he said, a rise in unpaid care can even push hospitals to lower prices for insurers in hopes of attracting more paying patients.

Bacchi disputes that theory. He argues that in many parts of California, hospital competition is limited, giving providers leverage to charge insurers steep rates, since insurers are legally obligated to keep certain hospitals in their networks.

“Any place that does burns, transplants, any of those high-cost services, has absolute control,” Bacchi said.

Somewhere between those two positions lies a rough consensus: Kenneth Thorpe, a health policy professor at Emory University, estimates federal cuts alone could push premiums up by 1% to 2%, or roughly $500 a year for the average family. On top of that, California lawmakers passed a new tax on health plans meant to help offset Medi-Cal’s federal funding losses — a move insurers say will tack on an additional $100 per person annually.

“That all hurts compared to what’s happening with wages, which is pretty stagnant,” Thorpe said. “It’s a bad time right now.”

The bigger picture

Wright, of Families USA, said the human cost of losing coverage extends well beyond individual patients, rippling through entire communities. The same dynamics that turned King-Harbor’s 2007 closure into a regional healthcare crisis — a surge of uninsured patients and overwhelmed emergency rooms — could resurface again, this time with the potential to strain hospitals across much of the state.

“It means people live sicker, die younger and are one medical emergency away from financial ruin,” Wright said.

Original source: CalMatters

The post How Medicaid Cuts Could Affect Southern Californians of All Income Levels 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.

Consumer Watchdog says Uber failed to make clear to legislators that it largely insures itself through a subsidiary, even as the company argued that insurance mandates were driving up fares for riders and costs for drivers. The law, Senate Bill 371, lowered Uber’s required uninsured and underinsured motorist coverage from $1 million to $60,000 per person and $300,000 per incident.

The issue matters to riders and drivers across Southern California, where Uber is widely used for commuting, airport trips, medical appointments and nightlife transportation. During legislative hearings, Uber told lawmakers that state-required insurance was a major factor in ride costs, particularly in Los Angeles County.

Ramona Prieto, Uber’s director of public policy, told the Assembly Insurance Committee last July that government-mandated insurance accounted for roughly 45% of ride-hailing fares in Los Angeles County and about one-third of fares elsewhere in California. She said those costs were being passed on to people who depend on rideshare service.

But Consumer Watchdog’s May report, based on Uber’s public financial filings, found that nearly 95% of the company’s risk is insured by Aleka Insurance, an Uber subsidiary. The group also said Uber’s insurance reserves doubled from 2023 to 2025, reaching $12.46 billion.

Uber spokesperson Zahid Arab denied that the company misled lawmakers, saying legislators understood that California’s rideshare insurance requirements were unusually costly and were increasing expenses for both riders and drivers.

Assemblymember David Alvarez, a Chula Vista Democrat, said he was not aware Uber largely self-insures because that information was not disclosed to the committee. In an emailed statement, Alvarez said the proper level of Uber’s reserves is an actuarial question, but whether lawmakers received a clear picture of where riders’ insurance dollars were going before voting on the bill is “a separate, and more troubling, question.”

The new law includes disclosure requirements and calls for a study of its effects. Alvarez said he hopes that review will examine how captive-insurance structures, such as Uber’s arrangement with Aleka, affect rate-setting for companies like Uber so future decisions are made with fuller information.

State Sen. Christopher Cabaldon, the Napa Democrat who authored the law, declined to comment through a spokesperson.

CalMatters contacted several lawmakers involved in the bill’s consideration. Some did not respond, and none agreed to discuss whether they knew about Uber’s self-insurance structure or whether they planned to question the company about Consumer Watchdog’s findings. A spokesperson for Assemblymember Mia Bonta, a Bay Area Democrat, said her office had asked Uber about the report and that the company dismissed it as not credible while being “less than forthcoming.”

Campaign finance records in the CalMatters Digital Democracy database show Cabaldon has received a campaign contribution from Uber. Five of eight lawmakers contacted by CalMatters, including Alvarez, also have received Uber contributions. Bonta has not.

The insurance bill was linked to another major labor measure that allowed ride-hailing drivers to unionize. Consumer Watchdog also said Uber misrepresented the insurance issue to unions. The Service Employees International Union California did not provide a response. Lorena Gonzalez, head of the California Labor Federation and a former state lawmaker, said she was not surprised by the allegation, citing her long history of conflict with the company over labor issues.

Consumer Watchdog argued in its report that Uber’s nearly $12.5 billion in reserves is far more than necessary. The group estimated the company would need between $4.5 billion and $5.4 billion, based on the number of rides Uber provided last year and California commercial auto insurance costs. Unlike profits, insurance reserves are not taxed.

The group also said Uber has moved about $4 billion of its insurance reserves into cash over the past couple of years, citing the company’s financial filings.

Arab rejected the report’s conclusions, saying Consumer Watchdog was treating speculation about complex insurance accounting as fact. He said Uber’s reserves are actuarial estimates of potential unpaid losses and related expenses.

Ben Armstrong, an actuary who reviewed Uber’s filings for Consumer Watchdog, said Aleka functions as a captive insurer, meaning it is a wholly owned subsidiary that allows Uber to manage its own insurance risk, profits and investments with limited public transparency. Armstrong said he does not have access to the kind of financial detail typically available for other insurers, but the filings suggest Uber may be reserving far more than it needs.

Large companies often use captive insurance arrangements. Lyft and DoorDash also have insurance subsidiaries, according to public filings with the U.S. Securities and Exchange Commission. As of the end of last year, Lyft reported about $2.2 billion in insurance reserves and DoorDash about $1.1 billion.

Opponents of SB 371 warned during the legislative process that reducing coverage would weaken protections for passengers and drivers if an Uber vehicle is struck by an uninsured or underinsured motorist. Robert Herrell, executive director of the Consumer Federation of California and a former deputy commissioner at the state Department of Insurance, opposed the bill and said Uber has long sought to lower its costs by reducing insurance obligations.

The state law is not Uber’s only effort to reduce liability. The company also qualified a proposed initiative for the November ballot that would limit attorney contingency fees and recovery of medical costs in California car crash cases. Consumer Watchdog, attorney groups and some medical providers opposed the measure. Uber has agreed to withdraw it if lawmakers approve a compromise bill.

In Congress, California lawmakers are divided over another proposal involving ride-hailing liability. Rep. Vince Fong, a Bakersfield Republican, introduced language in May that would override state laws holding companies such as Uber responsible for harm to people or property connected to rideshare trips. Fong described the proposal as an affordability measure, saying companies are facing frivolous lawsuits that drive up insurance costs.

Rep. Derek Tran, a Democrat from Cypress in Orange County, sent a letter this month with 33 other California Democratic members of Congress urging House leaders to remove the provision from a major transportation and infrastructure bill. The lawmakers warned that the language could sharply limit legal recourse for victims in injury, sexual assault and fatality cases involving rideshare companies.

Fong’s office did not respond to questions about the opposition from other California lawmakers.

Uber says California riders are already saving millions of dollars under the new insurance law, though the company has not provided documentation. It is required to submit a formal report on savings to the governor and Legislature by Feb. 1, 2027.

Third-party data does not yet show a broad drop in fares. Gridwise, a company that provides an app used by rideshare drivers to track earnings and expenses, reported that average California customer fares so far this year were slightly higher or roughly the same as last year in most months. The exception was May, when the average fare per mile was $4.67, down from $4.70 the previous May. Gridwise says its data is based on hundreds of millions of trips.

The law also directs the state Department of Insurance to work with the California Public Utilities Commission on a study of the effects of lowering the required insurance coverage. That report is due by Dec. 31, 2030.

Original source: CalMatters

The post Lawmaker Says Uber Withheld Key Details in California Insurance Law Push 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.