California commissioner faces criticism as he tries to solve crisis in home insurance coverage | Dan Walters

"Father Knows Best" was a popular radio show in the post-World War era that morphed into an even more popular television series starring actor Robert Young.

Young's character, Jim Anderson, was an insurance company executive — probably the only time American mass media have positively portrayed such a figure. Young later played a much more sympathetic role, a doctor who made house calls, in "Marcus Welby, MD."

Insurance to indemnify us for liabilities and damages to our homes, cars and businesses is a modern necessity, but consciously or subconsciously we often resent paying for coverage that is seldom invoked.

Politicians tend to play on that resentment by promising, if elected, to protect voters from rapacious insurers.

In California, that attitude took the form of a 1988 ballot measure, sponsored by a self-designated consumer protection group, that made the state insurance commissioner an elected official with new authority to regulate insurers.

The sponsoring group, Consumer Watchdog, has since been paid millions of dollars in "intervenor fees" for inserting itself into insurance rate cases pending in the Department of Insurance, but it claims to have saved Californians $6 billion.

Ever since he launched his 2018 campaign for insurance commissioner, former state Sen. Ricardo Lara has faced sharp criticism from Consumer Watchdog, which denounced him as a tool of the insurance industry.

However Lara has had to contend with an unprecedented crisis in California's insurance market. The disastrous wildfires that have swept through California in the last half-decade prompted many insurers to curtail their exposure, some to the point of abandoning the state altogether.

California's insurance regulatory system, they said, made it impossible to accurately project potential losses and adjust their premiums accordingly.

As tens of thousands of policies were canceled or not renewed, property owners scrambled to find new coverage, and many turned to the state's insurer of last resort, the FAIR program, that offers only limited reimbursement for losses at high cost.

Furthermore, because mortgage lenders require borrowers to maintain insurance coverage on their property, the insurance crisis has contributed to California's housing crisis.

Lara, backed by Gov. Gavin Newsom, has proposed systemic changes in how insurance is priced. He agreed with insurers that their rate proposals should be processed more rapidly, that they should be allowed to include potential losses from wildfires and other catastrophes in their rates, and that the costs of reinsurance — to spread the financial burden of losses — should be folded into premiums.

"We do not have the luxury of time," Lara said in a press release last week as he announced the adoption of new rules to speed up rate cases.

Consumer Watchdog is still nipping at Lara's heels, saying "we remain concerned that the new procedures announced by the commissioner will short-circuit public participation and rates will be rubber-stamped."

"Consumer Watchdog will analyze this action to determine if it is an illegal underground regulation or otherwise violates Proposition 103 by shutting consumers out of the process," it added.

Anticipating the criticism, Lara's announcement last week said, "Any intervenor groups engaged on certain rate filings must provide a 'substantial contribution' to the rate review process and not duplicate the work of the department's rate review experts to be eligible for compensation."

Would Lara's proposed regulatory changes likely make insurance coverage more expensive in fire-prone regions? Yes, but there are no free lunches and it's better to have costlier coverage than none.

If nothing else, Lara deserves credit for actually doing something about a severe crisis, rather than passing the buck – a contrast with how California officials are dealing with another crisis, homelessness.