{"id":456618,"date":"2025-02-20T00:01:00","date_gmt":"2025-02-20T08:01:00","guid":{"rendered":"https:\/\/calmatters.org\/?p=456618"},"modified":"2025-02-19T15:17:18","modified_gmt":"2025-02-19T23:17:18","slug":"los-angeles-wildfires-insurance-politics","status":"publish","type":"post","link":"https:\/\/calmatters.org\/_es\/commentary\/2025\/02\/los-angeles-wildfires-insurance-politics\/","title":{"rendered":"Los Angeles wildfires intensify political jousting over home insurance premiums"},"content":{"rendered":"

The timing could not have been better \u2014 or worse.<\/p>\n\n\n\n

The horrendously destructive and deadly Los Angeles wildfires erupted in January just as Insurance Commissioner Ricardo Lara\u2019s historic and very controversial overhaul of how insurers calculate premiums was taking effect<\/a>.<\/p>\n\n\n\n

On one hand, the disaster drove home the insurance industry\u2019s contention that California\u2019s propensity for such catastrophes creates immense potential losses that cannot be profitably insured without changes in the rate-making system.<\/p>\n\n\n\n

However as fire victims inundated insurers with claims<\/a>, Lara faced pressure to crack down on companies that minimized or delayed settlement payments. Meanwhile, his critics accuse him of being too cozy with the industry he regulates, as a Art\u00edculo de Los \u00c1ngeles Times<\/a> detailed this week.<\/p>\n\n\n\n

It is, to put it mildly, a yeasty situation.<\/p>\n\n\n\n

Lara, a former state legislator who was elected as insurance commissioner in 2018, began drafting his new regulatory plan in response to decisions by major insurers to cut back on policies in California \u2014 or even leave the state altogether \u2014 because of seemingly endless waves of destructive wildfires.<\/p>\n\n\n\n

They contended that California\u2019s long-standing system for calculating premiums, basing them on past experiences, was inadequate. They wanted to include estimates of future exposure, and the costs of obtaining reinsurance to ease their losses, in the process.<\/p>\n\n\n\n

Lara incorporated those changes in his plan, but only if insurers were more willing to write policies in fire-prone regions.<\/p>\n\n\n\n

\u201cGiving people more choices to protect themselves is how we will solve California\u2019s insurance crisis,\u201d Lara said as he released details of the plan<\/a>. \u201cFor the first time in history we are requiring insurance companies to expand where people need help the most. With our changing climate we can no longer look to the past. We are being innovative and forward-looking to protect Californians\u2019 access to insurance.\u201d<\/p>\n\n\n\n

It drew sharp criticism from Consumer Watchdog, the Southern California organization that wrote the 1988 ballot measure making the insurance commissioner\u2019s position elective and increasing regulatory powers. The group had been sniping at Lara ever since his election, accusing him of taking campaign money from insurers and not aggressively overseeing their operations.<\/p>\n\n\n\t\n\t\t

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\n\t\t\t\t\tLeer siguiente<\/span>\n\t\t\t\t<\/h2>\n\t\t\t\t\t\t\n\t
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Big homeowner rate hike from State Farm shot down by California regulator<\/a><\/h3>\t\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\tby<\/span> Levi Sumagaysay<\/a><\/span>\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t<\/article>\n\n\t\t\t\t<\/div>\n\t\t\n\t<\/div>\n\t\n\n\n

The group had benefited handsomely from \u201cintervenor fees\u201d<\/a> in rate-making cases awarded by previous commissioners. Lara has been less generous, although the organization got $643,530<\/a> in 2024, 100% of the year’s awards.<\/p>\n\n\n\n

The Los Angeles fires have forced Lara to juggle his long-term efforts to stabilize the insurance market with immediate responses to issues arising from the disaster.<\/p>\n\n\n\n

Lara authorized insurers to impose assessments on their policyholders to shore up the shaky finances of California\u2019s FAIR plan<\/a>, a last-ditch system that covers property owners unable to get coverage from the regular market that has seen a huge increase in applications.<\/p>\n\n\n\n

However, he refused to immediately approve a request by State Farm<\/a>, California\u2019s largest insurer, for a 22% emergency rate hike, saying the company had to prove a need.<\/p>\n\n\n\n

If nothing else, the Los Angeles fires underscored the absolutely vital role of a healthy insurance market \u2014 not only in protecting the investments that Californians have in their homes and businesses, but as a key component in buying and selling of real estate. Lenders simply will not issue mortgages for property that is uninsured.<\/p>\n\n\n\n

The insurance commissioner must, of course, protect the interests of consumers, but one of those interests is a healthy insurance market, and a parallel duty is making insurance profitable enough to keep insurers willing to do business in California.<\/p>\n\n\n\n

Whether Lara\u2019s rate-making overhaul will fulfill both of those imperatives remains uncertain. He at least deserves credit for trying to fix a dysfunctional system after the Legislature and Gov. Gavin Newsom bowed out and gave him the task.<\/p>\n\n\n\t\n\t\t

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\n\t\t\t\t\tLeer m\u00e1s<\/span>\n\t\t\t\t<\/h2>\n\t\t\t\t\t\t\n\t
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\n\t\t\t\t\tEconom\u00eda<\/a>\t\t\t\t<\/div>\n\t\t\t\t

California homeowners will have to fund half of high-risk insurer’s $1 billion \u2018bailout\u2019<\/a><\/h3>\t\t\t\t\t\t\t\t\t\t
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\n\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\"LA\t\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\n\t\t\t\t\t\t\t<\/figure>\n\t\t\n\t\t
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\n\t\t\t\t\tEconom\u00eda<\/a>\t\t\t\t<\/div>\n\t\t\t\t

LA fires could drastically drive up insurance premiums \u2014 and test California\u2019s new market rules<\/a><\/h3>\t\t\t\t\t\t\t\t\t\t
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