Consumer Watchdog Again Calls for California Commissioner’s Resignation

An article published by the New York Times has set up yet another controversy for California Insurance Commissioner Ricardo Lara.

With many insurers either leaving the California homeowners market, or at least threatening to leave, the newspaper story says Lara cut a deal with several insurance conpanies in 2023 to keep them writing homeowners business. Higher rates — the NY Times contends — were given to insurers to get them to keep writing policies in areas at more risk for wildfires.

The paper says during negotiations, Lara and his staff deliberately put loopholes into the agreements that allowed the insurers to not write more business in the riskier areas of California.

“Vast swaths of the designated areas where insurers must write new policies do not in fact overlap with areas that California’s state fire marshal deems to be the most fire-prone, the investigation found, meaning that insurers can load up on coverage in areas the state considers to be safer and still qualify to charge higher rates,” the New York Times story states. “As a result, insurance companies will be able to raise rates and offload billions of dollars in costs and liabilities to ratepayers while taking on few, if any, new customers in high fire-risk areas.”

Carmen Balber — the executive director of Consumer Watchdog — said her group believes the New York Times story is accurate and alleges Lara’s decision makes the California Department of Insurance a partner with the insurance companies doing business in the state.

“Commissioner Lara’s deal with insurers gave them a reason to abandon California families and double the size of the FAIR Plan. Despite Lara’s promises, insurance companies will get big rate hikes but don’t have to sell a single new policy in wildfire-risk areas,” Balber stated. “Governor Newsom must step in and appoint a commissioner who will stand up to the insurance industry, enforce the law, and get consumers the benefits they’ve paid for.”

Lara denies the claim.

“We built the Sustainable Insurance Strategy knowing that insurance companies and intervenors would prod and probe for loopholes they think they can exploit. This is not a surprise to anyone that has dealt with them. If it is, welcome to Earth. All eyes are on insurance companies including mine and the NY Times,”Lara said. “I won’t accept another 30 years of stagnant regulations. I’m here to finish the job — and leave the next Commissioner in a stronger position than I inherited. For 30 years under past Commissioners, no coverage guarantee of any kind existed. This is an undeniable first and we are focused on stopping the growth of the FAIR Plan and making these regulations work for those who need coverage the most.”

Source link: Insurance Journal — https://bit.ly/3Lvw67f