Here’s why L.A. fire survivors want Ricardo Lara’s resignation

A New York Times investigation recently revealed that California Insurance Commissioner Ricardo Lara struck a secret deal with insurance companies, giving them regulatory favors while allowing them to dump tens of thousands of policyholders.

It was a bombshell. But for those of us living through this crisis, it wasn’t news. 

As survivors of the Los Angeles fires, we’ve spent 10 months inside the collapse of California’s insurance system. In a survey of insured L.A. fire survivors, 70% report their recovery has been impeded by delays and denials. 

A system that should be a safety net has become a wrecking ball, destroying our finances, our health and the futures we’ve worked so hard to build for our kids. California’s recovery is being dragged down by the collapse of its insurance system and by one official’s failure to stop it. 

California has some of the nation’s strongest consumer protection laws. Insurance Commissioner Ricardo Lara simply hasn’t enforced them. Even after survivors submitted more than 400 reports of delays and denials, he approved a billion-dollar rate hike for State Farm in May while delaying scrutiny of its misconduct. 

There’s a name for this: regulatory capture. It’s when an official charged with regulating an industry ends up serving that industry instead. In California, that concept is embodied by Ricardo Lara. 

For nearly 10 months, we’ve called on Lara to fulfill the duties of his office. In August we gave him a clear roadmap outlining five urgent actions he could take immediately to end the illegal delays and denials. Among our recommendations: that he freeze insurers’ rate hikes until fire survivors are made whole, and that he require insurers to be transparent in their loss estimates.  

So far, he has failed to act. 

The situation is critical. More than 8 in 10 Los Angeles fire survivors remain displaced, and most will lose their housing coverage within months. Each day of inaction pushes more families into housing insecurity and despair. 

Two crises now define California’s insurance system: Families can no longer buy or renew coverage, and those who still have it often can’t access the benefits they’ve already paid for. 

Lara has failed on both fronts. 

As the New York Times reports, Lara’s secret 2023 deal let insurers dump tens of thousands of policyholders in exchange for future rate hikes — and insurers did, just months before the L.A. fires. Families were left scrambling for coverage or were pushed into the state’s high-cost, low-benefit FAIR Plan. 

The deal was sold as a way to keep people out of the FAIR Plan. Instead, enrollment has doubled. And for those who still have insurance, a different disaster begins the moment they try to use it. FAIR has been sued for denying smoke damage claims, and consumers have complained for months about customer service, payment delays and slow response times.

We know what happens when insurance fails. California’s five most destructive fires, between 2017 and 2020, destroyed 22,500 homes and, as of this year, only 38% have been rebuilt. The data is clear: when insurance pays promptly, communities recover. When it doesn’t, families are broken forever. 

That is where the Los Angeles recovery is headed. Progress has stalled because the system meant to protect us has become the obstacle. 

As insurance erodes, California’s housing market is starting to show strain. Without coverage, homeowners can’t buy, sell or refinance. Lenders are retreating, property values are falling and construction is stalling. 

What began as an insurance crisis is rapidly becoming a credit and housing crisis that threatens the stability of the entire state economy. 

Lara has failed to stop illegal insurer delays and denials, and he has encouraged the mass dumping of policyholders. Whether his failure stems from intent or incompetence is a matter for the investigations now examining his conduct. 

What matters urgently is that he leaves — now.  We call on Gov. Gavin Newsom and other state leaders to urge his resignation and appoint new leadership at the Department of Insurance.

 Californians deserve a functioning insurance system that protects us all.