Lara seeks to fulfill insurance company wishes | Thomas Elias

As he prepares for his last year in office, California Insurance Commissioner Ricardo Lara is going all out to make it easier for insurance companies to fulfill their wishes, doing their bidding as he usually has during seven years as the state's insurance boss.

He's now under investigation by the state Fair Political Practices Commission for accepting help with campaign expenses and travel gifts including a trip to Bermuda.

Far more damaging to customers, he allowed the cancellation of thousands of homeowner policies, forcing most of the rejected into the state's last-chance Fair Plan, much more expensive than regular insurance.

Now he proposes to make himself the sole arbiter of how much insurance companies can charge for property and vehicle coverage. He wants to change rules letting consumer groups scrutinize and challenge rate increases sought by companies like State Farm, Allstate and many others.

The rules for challenges are set by the 1988 Proposition 103, which also made the insurance commissioner an elected official with a two-term limit. Lara's tenure began in early 2019, so he must depart the office just after Jan. 1, 2027.

Meanwhile, he filed a draft resolution allowing himself to deny payments to groups that fight proposed insurance rate increases. Thirty-six public interest non-profits quickly urged him to withdraw that plan.

Lara essentially wants to defy Prop. 103, the state's main insurance law, which requires the companies to pay consumer representatives (known as "intervenors") legal fees and to compensate experts who testify in rate cases.

Lara seeks to circumvent that law by vetoing consumer groups' payments if he finds their advocacy is "vexacious," "duplicative," "oppositional" or "irrelevant," plus a few other adjectives.

Mainly, this is an effort to squelch or silence Consumer Watchdog, the group whose founder Harvey Rosenfield authored Prop. 103. That non-profit is the preeminent intervenor in insurance rate proceedings, saving consumers more than $6 billion in rates (compared to charges in other states) since passage of Prop. 103.

Lara and the insurance industry claim Consumer Watchdog and other such groups harm the California housing market by delaying rate hikes.

This makes no sense when you consider that the higher insurance rates go, the higher project costs will rise.

Meanwhile, national parent companies of California's largest insurers, like State Farm and Allstate, refuse to tap much of their gigantic cash reserves to help their branches here pay claims from wildfires and other disasters.

For one example, State Farm's parent, based in Illinois, had about $145 billion on hand in 2024, but reportedly contributed less than $2 billion for payouts to policyholders after last January's Los Angeles County firestorms.

Apologists for Lara and the companies claim delayed insurance rate hikes impede new housing. They assert that when intervenors question rate increases, the time doubles for approval of new and higher rates.

Wrote one pro-insurance industry lobbyist, "when insurance costs balloon …, project costs don't pencil out."

That's true, but it's not the fault of consumer groups, which keep rates down as much as they can for as long as they can. State Farm, for example, right now is charging California customers $749 million annually for an "emergency" rate increase granted by Lara after the company months ago asked for $1.2 billion.

Only resistance from Consumer Watchdog delays part of State Farm's request and other, similar, ones. Without it, the rates asked by the companies likely would have slid through without their having to justify any of their additional premiums.

It is plain illogical to argue – as lobbyists often do – that lower insurance rates raise project costs.

Critics of intervenors like Consumer Watchdog also complain the group has collected $14 million in fees since 2013 – which Consumer Watchdog says came to about 25 cents for every $100 it has saved insurance customers.

Meanwhile, Lara promised in 2018 not to take any campaign money from insurance companies. Later, he admitted taking such donations and refunded $83,000.

Here's something to look for in 2027 and 2028, long after the issue of intervenor payments is resolved: Will Lara end up as an insurance company official and how much might he be paid? That's a legitimate question in a state where several past presidents of the Public Utilities Commission later became top executives of companies they once regulated.