EDITORIAL: California insurance czar’s troubling first 7 months in office

Aug. 23--California Insurance Commissioner Ricardo Lara has some explaining to do.

No one in the state has a bigger voice on the future of health, auto and homeowner insurance rates than Lara, who oversees 1,300 insurance companies and $310 billion in premiums every year. It's imperative that he balance consumer and business interests. Sadly, his actions call into question his commitment to ratepayers.

During his 2018 campaign, Lara promised not to take donations from the insurance industry. He broke that pledge but promised to give back the money. Then, in July, the San Diego Union-Tribune revealed that, since being elected in 2018, Lara had taken tens of thousands of dollars of campaign contributions for his 2022 re-election campaign from industry executives and their apparent spouses.

The Union-Tribune reported that Lara is believed to be the first California insurance commissioner to accept contributions from the insurance industry since Chuck Quackenbush resigned in disgrace in 2000. Quackenbush was caught in a scandal in which he went easy on insurance companies and they donated money to a fund he used for television public service spots featuring himself.

While there's no indication Lara has stooped to Quackenbush's level, the incumbent's behavior is troubling. In an unusual move, Lara served as his own campaign treasurer, meaning he took it upon himself to review donations from contributors. All told, he accepted more than $53,000 for his re-election campaign from people with connections to the industry. The insurance commissioner said that he is returning the contributions to his re-election campaign.

But the donations aren't the only reason to question Lara's performance.

The Sacramento Bee reported July 29 that Lara acknowledged meeting May 6 with a CEO whose company has multiple complaints against it in cases before his department. The meeting with Steven M. Menzies, CEO of Applied Underwriters, came after out-of-state executives with ties to the company made $46,500 in contributions in April to Lara's re-election campaign.

Coincidence? Perhaps, but hard to believe. Lara has recused himself from dealings with cases involving Allied, but he should release all records pertaining to his communications with the company. And he should release his calendars so that the public knows who the insurance commissioner has met with since taking office. A spokesman for Lara's office said the commissioner intends to comply with all public requests but has yet to do so. The spokesman also would not commit to Lara's releasing his calendars as standard operating procedure.

Making matters worse, legislation backed by Lara further fuels concerns that he is favoring insurers over consumers.

A vote on a wildfire insurance bill sponsored by Lara was canceled last week after a state Department of Finance review identified significant flaws. The bill, SB 290, would allow the governor to purchase insurance to help mitigate state costs resulting from the anticipated costly wildfire season.

But the state Department of Finance said the governor already has the emergency powers needed to purchase insurance if necessary. And an analysis by the Assembly Appropriations Committee added that the bill allows for the purchase of reinsurance "without robust reporting, analytical or oversight requirements." That could expose ratepayers to financial risk while fattening the profits of insurance companies.

Lara has been in office just 7 1/2 months. His performance so far has raised legitimate concerns about whether he's looking out first for California ratepayers or for his political ambitions.

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