CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, DECEMBER 16, 2025 OR THEREAFTER
BY THOMAS D. ELIAS
“LARA SEEKS TO FULFILL
INSURANCE COMPANY WISHES”
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.
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Email
Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough:
The Most Promising Cancer Treatment and the Government’s Campaign to Squelch
It," is now available in a soft cover fourth edition. For more Elias
columns, visit www.californiafocus.net.
