Wildfire Victims Ask Gov. Newsom to Call for Insurance Commissioner’s Resignation

A few of the victims of the Los Angeles wildfires in January are asking California Gov. Gavin Newsom to call for the resignation of California Insurance Commissioner Ricardo Lara over reforms Lara pushed that were designed to help ease the state’s homeowners insurance crisis.

The calls for Lara’s resignation follow a New York Times article that an agreement between Lara and several insurers, intended to keep carriers from continuing to withdraw from the wildfire-prone state, enabled carriers to drop tens of thousands of policyholders ahead of the L.A. fires.

According to the New York Times article, in 2023 Lara struck a deal with insurers that enabled them to drop policyholders in exchange for future rate hikes, but it was billed as a way to keep people out of the California FAIR Plan.

During a press conference being promoted by a consumer advocate group, wildfire victims talked about losing coverage and called on Newsom to ask Lara to resign.

Branislav Kecman, whose home was destroyed in the Eaton Fire, said his family paid premiums to State Farm for 12 years before being dropped and forced into the FAIR Plan months before the fire. Kecman’s coverage in the new plan was less than what he had before.

“That was painful enough,” he said. “But what’s truly devastating is learning that our own Insurance Commissioner secretly cut a deal that encouraged insurers to drop families like ours. We thought we could trust the system. We never imagined we’d be betrayed by the very person elected to protect us.”

A Pacific Palisades resident who lost her home in the fire that devastated that community said that what she was dropped by her carrier of 25 years.

“But the real disaster was the endless maze of delays and denials,” stated resident Jill Spivack. “I had to put my business on hold just to fight for what we’d already paid for. Gov. Newsom, your words gave us hope. Now we need your actions to make that hope real. Californians deserve an insurance commissioner who protects families, not the insurers doing the most harm.”

The California Department of Insurance when reached out to for comment provided the following response from Lara to the artcle:

“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. 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.”

The American Property Casualty Insurers Association has also been reached out to for comment.

The New York Times article, which examines the “historic” compromise to reward insurers with higher rates in exchange for protecting homeowners in neighborhoods that were in greater risk from wildfires, found that a “loopholes quietly negotiated by the insurance industry all but eliminated that guarantee” that insurers would continue to cover risky areas of the state.

“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 article 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, executive director of Consumer Watchdog, said Lara’s deal essentially made him the “industry’s business partner.”

“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.”

Topics Catastrophe Natural Disasters Wildfire

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