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It’s no fun being California insurance commissioner

by Cedric Guzman

The Role of California’s Insurance Commissioner Comes Under Scrutiny

The role of California’s insurance commissioner has come under scrutiny as the state faces an exodus of insurers and a growing crisis in the insurance market. Since Commissioner Ricardo Lara took office in 2019, seven of the state’s top insurers have pulled back from the California market, leaving over 270,000 property owners dependent on the FAIR Plan, the property insurer of last resort. This situation has raised concerns about the availability and affordability of insurance coverage for Californians, particularly those living in fire-prone areas.

To address this issue, Commissioner Lara recently announced a plan to allow insurers to increase rates in exchange for a commitment to stay in the state. The aim is to prevent cherry-picking by insurers and ensure that people in high-risk areas have access to coverage options. However, the effectiveness of this plan remains uncertain. The development of new rules is expected to take over a year, and there is a possibility of a voter backlash, as Californians have enjoyed some of the lowest property insurance rates in the country for decades.

Commissioner Lara initially sought political cover from lawmakers but had to turn to Democratic Governor Gavin Newsom, who issued an executive order directing the insurance department to come up with a plan. This move prompted skepticism from some who are interested in succeeding Commissioner Lara, such as Senator Mike McGuire, who opened a campaign account to run for insurance commissioner in 2026. McGuire stated that a “wait and verify approach is definitely needed” and emphasized the need to stabilize the insurance market and ensure affordable coverage for Californians.

The role of California’s insurance commissioner has always been challenging, even before the unprecedented wildfire losses in 2018. Former insurance commissioners, including Congressman John Garamendi, described it as a daily battle between insurers and consumer protections. Commissioner Lara has faced criticism for accepting political contributions from individuals tied to the industry he regulates, raising concerns about the integrity of his decisions.

Consumer Watchdog, an advocacy group, has been particularly vocal in its disappointment with Commissioner Lara’s performance. The group’s president, Jamie Court, warned that they may endorse Lara’s opponent in future races if he exceeds his boundaries as insurance commissioner. This has led to an investigation by the California Fair Political Practices Commission and ongoing attacks from Consumer Watchdog.

Commissioner Lara’s spokesperson pointed to other moves he has made, such as restricting insurers from dropping customers in areas recently affected by wildfires and requiring discounts for homeowners who make their properties more fire-resistant. However, concerns remain about the commissioner’s ability to address the insurance market crisis effectively.

Ultimately, the next insurance commissioner will inherit a significant challenge, with proposed solutions likely to result in increased costs for consumers. Clearly, effective communication and collaboration will be crucial in addressing this crisis. As one communications aide to insurance commissioners advised, making friends and having everyone on the same page will be essential for any future candidates for the position.

In conclusion, California’s insurance commissioner is facing scrutiny as insurers leave the market and residents struggle to find affordable coverage. Commissioner Lara’s plan to allow insurers to increase rates in exchange for commitment may offer a potential solution, but it remains uncertain whether it will be successful. The upcoming insurance commissioner will need to navigate a complex landscape and work towards stabilizing the market while ensuring affordable coverage for Californians.

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