CA insurance commissioner responds to criticism over lack of transparency, accountability
SAN FRANCISCO (KGO) -- California's insurance crisis is in chaos, spurring calls for the state's Insurance Commissioner, Riccardo Lara, to step down if he's unwilling to hold insurers accountable. State and federal officials have criticized Lara over what they view as a lack of transparency.
This controversy comes as the state will start implementing its plan to expand coverage in fire-prone areas by the end of the year.
Meet Valerie, Janet, and Bob
After Valerie Baldwin was dropped by AAA, her insurance provider of 40 years, she was forced to switch to another provider, which she said spiked her spiked her premiums "about 50% more."
Baldwin described her attempts to get answers from the state.
"I would think they would try to give us some help," she said. "We got nothing, absolutely nothing."
Like millions of Californians, it's the same story with her neighbors Bob and Janet. Both were dropped and are facing spikes in their premiums between 50 and 60%. Their properties are directly adjacent to a fire station.
"I'm numb with fear," said Janet, an 86-year-old widow. "I don't know what I'm going to do."
Fear turned to frustration as the group of neighbors tried to get answers from Insurance Commissioner Lara, the man with the legal authority to respond to these situations.
"He said you're on your own," Baldwin said.
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On Your Side
Our goal at 7 On Your Side is to help consumers like Valerie, Janet, and Bob, but the lack of communication with Commissioner Lara and his office became part of the story.
7 On Your Side Investigates made more than a dozen attempts over two months, via phone or email, to speak with Commissioner Lara about concerns regarding his insurance reform plan. His team never gave us a straight answer and rarely responded.
It wasn't until the sixth email attempt over the course of eight weeks that we got a response, but that was followed up by another week of no response.
7 On Your Side formally heard back from Commissioner Lara's staff the night before the story was published, and Lara spoke to us a few hours before our story aired.
"Why did it take so long to get ahold of you?" ABC7 News reporter Stephanie Sierra asked.
"I have no idea this was the case; I've been busy traveling the state," Lara said. "I apologize for that. I wasn't aware."
He said this was the first time it was brought to his attention.
A perspective from CA's former Insurance Commissioner
Congressman John Garamendi (D-Solano County) was California's first elected Insurance Commissioner, serving for eight years. Last year, he sent a letter to Commissioner Lara signed by dozens of California lawmakers, including nine from the Bay Area. The letter called on Lara to hold insurers accountable by using his authority granted by Proposition 103, the state law protecting consumers from unfair insurance practices and rates.
"I have been very concerned about the way in which the current commissioner has conducted himself in this office," Garamendi said. "Over the last three years, I have observed that this commissioner is not willing to take the hard task and the necessary task to stand up to the insurance industry. If the commissioner is not willing to do that, and there's plenty of signs that he is not, then he's not doing his job, and he should leave."
When asked, Lara said he did not have a response to Garamendi's comments.
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Homeowner Insurance Rates
When Lara was running for re-election in 2022, he said this about insurers raising rates: "I'm very kind of sketch about giving them any authority to raise rates without getting anything for the consumer."
Since then, the state's top insurers have raised homeowner and condo rates by at least 30 to 60%.
"You have the option to file legal action against these insurers. Will you do that?" Sierra asked.
"I will file legal action against an insurer that's breaking the law and breaking the current regulations that abide by Prop 103," Lara said. "The rates that you've been seeing reflect the risk of where we're living. We've had unprecedented fires since 2017."
Let's go back to 2017.
A State Senator's Perspective
"I'm very disappointed in the Insurance Commissioner Ricardo Lara's lack of being able to be transparent. We asked years ago for him to be engaged, and he just kept pushing it off," said State Senator Brian Dahle (R - Redding).
Sen. Dahle says he reached out to Lara nearly three and a half years ago for help after the 2017 Tubbs Fire and the 2018 Camp Fire, California's deadliest wildfire.
"He didn't respond; he wouldn't even respond to the calls I was receiving in my office, the people who couldn't get insured," said Sen. Dahle.
"What do you have to say about that?" Sierra asked Lara.
"Well, that's interesting because we've had several town halls in the Senator's district, that's a surprise for us," Lara said. "I'll make sure I connect with Senator, who's a good friend."
"This was a direct request to you from his office, not [about] a town hall," Sierra said.
"I mean, we get requests all the time; I don't know who they're filtered through." Lara said.
MORE: New proposal could help Californians in high-risk fire areas get their insurance back
Calls for Governor to Step In
Aside from his current and former colleagues in the state legislature, calls for action are coming from local city governments, too. Last month, Pasadena voted on a resolution requesting the Governor declare a State of Emergency related to the property insurance market.
Newsom issued an executive order last year calling Commissioner Lara to do more - highlighting the need for swift regulatory action to strengthen and stabilize the state's marketplace. The following June, Lara introduced his Sustainable Insurance Strategy or SIS.
"Governor Newsom should be working with the Commissioner in a way that encourages or forces [him] to carry out the responsibilities that [he] has by law to protect consumers," Rep. Garamendi said.
7 On Your Side Investigates contacted the Governor's Office for further comment. We received a June press release indicating Newsom's support for Commissioner Lara's draft insurance reform regulation.
"This is another critical action to help fix California's decades-old insurance crisis," Newsom said. "It will help homeowners who face higher threats of wildfire get the coverage they need."
However, consumers like Baldwin disagree. After struggling to get answers from the state, she signed with an insurer she didn't trust.
"This was a fly-by-night operation, and we live here in the 'woolly' - and if the place is all burned down, they'd high tail it out of town. I felt helpless," Baldwin said. "We need insurers to come back."
"There's been no transparency," Garamendi added. "The companies are not being held accountable for the rate increases, for the redlining that I know is taking place."
