- Insurance Commissioner Ricardo Lara has been grappling with the troubled market for his six years in office, and now his controversial plan to reform it will be put to the test after the costliest wildfires in the state’s history.
- Lara’s plan to make homeowners insurance more available gives insurers financial and policy concessions in exchange for a pledge to write more policies in risky neighborhoods.
- But consumer groups and others say the commissioner is too close to the insurance industry. Lara disputes the claim and argues that he does not have power to force insurers to write policies.
It has been more than a month since the harrowing wildfire swept through Pacific Palisades, and Marc Hara knows he should be grateful.
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After all, he and his fiancée managed to escape the blaze that leveled their condominium complex. But Hara, who is living at a relative’s house, is far from sanguine about his future.
Not only were all his possessions destroyed, but Hara figures the couple is out $170,000 after State Farm dropped him as a policyholder — something he only learned later, he said, after realizing the insurer mailed a nonrenewal notice for his interior coverage to an old address.
“My home is completely gone. We have absolutely nothing left,” said the 58-year-old physical therapist, who had recently remodeled his condominium and is now seeking FEMA disaster assistance. “I’m so screwed.”
Citing privacy policies, State Farm declined to discuss Hara’s situation, other than noting it sends nonrenewal notices in advance to the address on record it has for policyholders.
The frustrations voiced by Hara echo those of many other homeowners in the Pacific Palisades and Eaton fire neighborhoods who were dropped by their insurers as they retreated from fire-prone areas. Some enrolled in the state’s insurer of last resort with more limited coverage. Others, like Hara, might have had no coverage at all or couldn’t afford to pay higher premiums.
The devastation caused by the twin blazes has exacerbated a crisis in the insurance industry and raised fresh questions about whether the state — and its top insurance regulator, Ricardo Lara — has done enough to protect homeowners from not having adequate insurance to cover their losses.
The former legislator from southeast Los Angeles County has been grappling with the troubled market for his six years in office, and now his controversial plan to reform it will be put to the test after the costliest wildfires in the state’s history.
Damages from the blazes are expected to cost insurers as much as $45 billion. State Farm, the largest home insurer, has already asked for an emergency 22% rate hike due to the fires. Lara turned down the request last week, pending more evidence from the insurer.
Lara’s plan to make homeowners insurance more affordable and available, which was enacted last year, is largely based on a carrot-and-stick approach that gives insurers financial and policy concessions in exchange for a pledge to write more policies in risky neighborhoods.
But consumer groups, a former insurance commissioner and others say the commissioner is too chummy with the insurance industry. He has received past campaign contributions from insurers and held closed-door meetings with them as he hashed out his reforms.
“His regulations and his policies are clearly ones that the insurance industry wants,” said Rep. John Garamendi (D-Fairfield), former state insurance commissioner. “Your job is to hold the companies accountable, and he seems to be doing the exact opposite, and that is giving the companies whatever they want.”
Lara disputes the claim and disagrees with Garamendi that he has the power to force insurers to write policies.
“It would only exacerbate the problem at a time when insurance companies are pulling out of California,” he told The Times. “And, quite honestly, you know, this is not going to be the first or last time that I get white mansplained on how to do my job.”
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