SACRAMENTO, Calif. — California insurance commissioner used to be a stable bolthole for ambitious politicians waiting for a plum statewide position to open up.
But catastrophic wildfires fueled in part by drought and rising temperatures have thrust the insurance department to the front line of climate politics.
Insurance Commissioner Ricardo Lara, who was elected to the position in 2019 as a former state lawmaker with national ambitions, is finding himself in a no-win situation as he tries to prevent insurance companies from fleeing the state.
“I think when Commissioner Lara ran he was sort of like, 'This is like lieutenant governor, but with more stuff to do,'” said Michael Wara, who’s consulted with the state Senate and state energy regulators on wildfire and utility policy and directs Stanford University's climate program. “I don't think anybody thinks about it that way anymore.”
Seven of the state’s twelve top insurers have pulled back from the California market since Lara took office in 2019. The property insurer of last resort in the state, the FAIR Plan, has more than doubled in the same time frame to 270,000 property owners.
Lara announced last week he would allow insurers to increase rates in exchange for promising they’ll stay in the state — a tradeoff meant to stem cherry-picking by insurers that has left people in fire-prone areas with little to no coverage options.
He argued the magnitude of the threat to property owners necessitated the most significant changes to the state's insurance market since 1988, when voters turned the insurance commissioner into an elected position and gave it authority over rates.
“We will never face this array of challenges and all of them at the same time,” Lara said during the announcement last week.
Whether the plan will work is an open question. The development of new rules is expected to take more than a year. A voter backlash is also possible given that California residents have benefited from some of the country’s lowest property insurance rates for decades.
Lara had first sought political cover from lawmakers, who tried and failed to reach a deal by the end of the legislative session. Then Democratic Gov. Gavin Newsom issued an executive order on the same day as Lara's announcement directing the insurance department to come up with a plan.
Lara, who won reelection in 2022, will term out in three years. He’s said to be eyeing his next move, including a potential run for Los Angeles County supervisor.
Others who are interested in succeeding him are looking on warily.
Sen. Mike McGuire (D-Healdsburg), who opened a campaign account last year to run for insurance commissioner in 2026, said he wasn't convinced the changes would stabilize the market.
In a statement, McGuire said a “wait and verify approach is definitely needed.”
“It’s clear there’s more work still ahead to stabilize the market here in the Golden State, and ensure our neighbors have access to affordable insurance policies that actually protect their dwellings,” he said.
Past insurance commissioners say it was a tough role even before California suffered precedent-shattering wildfire losses in 2018 that started the exodus of insurers.
“It was a brawl every day,” said Rep. John Garamendi (D-Calif.), who served two separate turns as insurance commissioner in the 1990s and 2000s before serving as deputy Interior secretary in the Clinton administration, lieutenant governor and eventually congressmember. “I'd wake up in the morning and my wife would say, ‘It's eight o'clock and you haven't been sued by an insurance company; why aren't you working?’"
Lara has struggled to balance the tension between insurers and consumer protections. Early in his tenure, he accepted tens of thousands of dollars in political contributions from people with ties to the industry he regulates, breaking a campaign vow.
The seeming coziness with the industry led to an investigation by the California Fair Political Practices Commission and continued attacks from Consumer Watchdog, an advocacy group, whose leader is warning he may endorse Lara's opponent in whatever future races he might run.
“Lara has unfortunately been a very big disappointment,” said Jamie Court, Consumer Watchdog’s president. “We will watch him and if we think he's stepping outside of his lines or boundaries we will take him to court, and hopefully, we'll rein him in.”
Lara — who has declined interview requests for the past two months — didn't respond to a request for comment. A spokesperson for the department pointed to his other moves, including restricting insurers from dropping customers in areas recently affected by wildfires and requiring them to give discounts to homeowners who make their properties more fire-resistant.
Lara is likely to leave office before his pricing reforms fully take effect. Once the new rules are approved, insurers will still have to incorporate them into rates.
That leaves the next insurance commissioner to inherit a growing crisis in which nearly all the proposed solutions are likely to cost consumers.
“On its surface, it’s not a very winning message to put forward, unless you have everybody on the same page helping to explain that,” said Byron Tucker, a longtime communications aide to insurance commissioners who recently retired. His recommendation to those considering a bid for the position: “Make friends.”
Chris Cadelago contributed to this report.
