Ricardo Lara’s first year as California insurance commissioner — the elected office charged with regulating the state’s $310-billion insurance industry — was an ethical disaster.
In March 2019, Lara, a Democrat, held a lunch meeting with insurance company executives who had business pending before his department, for the purpose, records showed, of building a relationship that would benefit his reelection campaign. In April, he accepted more than $50,000 in campaign donations from insurance industry representatives and their spouses, including from people with ties to the company at the lunch meeting the month before. In June, Lara overruled decisions his department had previously made in ways that benefited the company.
None of this is illegal. But it looks horrible for someone whose job is to protect consumers from being overcharged by insurance companies.
Insurance commissioners have enormous power to impact the industry by approving or rejecting rate increases and investigating insurance fraud. To avoid the perception that money can buy favorable treatment, most of California’s past insurance commissioners have shunned campaign donations from the industry. Lara, too, pledged not to take insurance money when he ran in 2018.
After news broke that he’d taken the donations, Lara apologized and returned the money. He’s since cut ties with the political fundraiser who solicited donations from the insurance industry and says he put new practices in place to vet donors.
But Lara has also had other ethical lapses during a dozen years in public office, creating a troubling pattern.
In 2019, Lara billed taxpayers for maintaining an apartment in Sacramento while keeping his primary residence in Los Angeles, something other statewide officials don’t do. He gave up the apartment after it hit the news.
In 2013, as a state senator, Lara planned a political fundraiser at a Las Vegas casino that was lobbying the Legislature to approve a gambling compact for a California Indian tribe. The casino donated hotel rooms, food and tickets to a mixed-martial arts fight for Lara’s fundraising event — which was to take place the same week senators could vote on the gambling compact. Lara canceled the fundraiser after it hit the news.
Lara was right to change course when reporters exposed his questionable decisions. But Californians deserve elected officials who will operate ethically regardless of whether their name is in the headlines. For this reason and others, we believe Assemblymember Marc Levine will make a better insurance commissioner.
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Although they are both Democrats, Lara and Levine have very different styles as politicians. Lara is a California Democratic Party insider who rose through the ranks with strong ties to labor unions and other powerful interest groups. Levine has an independent streak, as shown by his move to challenge an incumbent Democrat in this race — and in 2012 when he bested another Democratic incumbent to win a seat in the Assembly.
During his decade in the Legislature, Levine has built a reputation as a somewhat-prickly but conscientious lawmaker who has proposed bills to tax guns to fund violence prevention programs, make environmental reviews available online and require government agencies to retain email and other public records for at least two years. He operates outside of the Capitol’s social-climber atmosphere, and is known more for focusing on constituents than for partying with lobbyists in Sacramento.
Levine represents a region north of San Francisco that’s been hit hard by wildfires. His interest in insurance issues began in 2017 after the devastating Tubbs fire destroyed nearly 3,000 homes in Sonoma County. He started to hear from constituents panicked because their insurance companies were refusing to renew their homeowner policies, an issue that has grown into a crisis in fire-prone parts of the state as conflagrations exacerbated by climate change become more common and more destructive. As a result, he wrote bills meant to prevent homeowners from becoming under-insured by requiring insurance companies to send updates on their property values and to give businesses and homeowners more leeway to rebuild in a different location following a fire.
As insurance commissioner, Lara developed new rules that require insurers to discount policies if homeowners take steps to mitigate their fire risk, such as installing fire-resistant roofs or clearing combustible vegetation from their properties. But under the proposed rules, an insurance company could choose not to cover a home, or an entire subdivision, even if it had been hardened to reduce fire risk.
Levine says he’s going further to help consumers by writing legislation requiring insurance companies to issue policies to homeowners who do such mitigation work.
Levine also says he would go further than Lara has in using the insurance commissioner’s authority to fight climate change. Insurance companies can support fossil fuel production in two ways: by insuring specific projects, such as a natural gas well or oil extraction site, and by investing in fossil fuel businesses. After facing pressure from environmental and consumer advocates, Lara recently released a new database showing how much insurance companies are investing in fossil fuels. Levine says he would push to make insurance companies report even more information, such as the carbon emissions from fossil fuel projects they underwrite and whether their requests to raise rates are tied to losses on fossil fuel investments.
The race also includes Robert Molnar, a top aide to former Insurance Commissioner Steve Poizner who is running without party preference; Democrat Vinson Eugene Allen, a medical doctor who owns a chain of urgent care clinics; and several lesser-known candidates who have never held elected office.
Levine stands out from the pack as the candidate who will best look out for consumers and the planet.
The state insurance commissioner is the top advocate for California consumers when it comes to insurance, whether that’s insurance for your car, home, or business. Their job is to ensure insurance companies are treating consumers fairly. They do that mainly by setting regulations for the industry (in other words, what insurance companies can or can’t do), handling licensing, and investigating consumer complaints.
When it comes to property or casualty insurance, the commissioner gets to approve or reject proposed rate changes, usually increases. But they also have to make sure that insurance companies can stay financially healthy in order to pay out claims — and so they don’t end up limiting services or leaving the state.
The commissioner oversees the 1,400-employee Department of Insurance, which regulates all kinds of insurance — home, auto, fire, earthquake, certain types of health insurance, and even pet insurance. It also regulates the bail bonds industry – bail bonds are seen as insurance that a person will return for their trial.
Think an insurance company is engaging in fraud or price-gouging? Or have reason to think an insurance broker’s license should be revoked? You can file complaints to the Department of Insurance, and they can launch investigations. The insurance commissioner can see what’s going on across the state, punish rule-breakers and hand down new regulations to prevent future abuses.
This position was a governor-appointed role until 1988, when voters passed a ballot initiative to make it an elected position. The move was largely seen as a revolt against high insurance premiums, especially for auto insurance.
You might recognize their work from…
Many of the rules that determine how much you pay for car insurance were shaped by insurance commissioners past. In California, ZIP codes used to be a primary factor in determining drivers’ auto insurance rates — as in, if you lived in an area with a high number of vehicle crashes, you’d likely be paying more for your insurance than if you lived elsewhere, even if you’d never been in a crash yourself.
That changed in 2005, when then-insurance Commissioner John Garamendi implemented new rules saying insurers had to decrease the weight assigned to ZIP codes in determining those rates, and focus more on factors like driving records and experience.
Insurers also used to be allowed to charge men and women different rates based on their gender. That ended in 2019, when then-insurance commissioner Dave Jones made California the seventh U.S. state to prohibit that practice. (Yes, until just three years ago.)
What’s on the agenda for the next term?
One word: wildfires.
Climate change and California’s now year-round fire season have turned the wildfire insurance industry upside down. As the number of wildfires — and damage to homes and livelihoods — has ballooned in recent years, so has the amount of insurance claims and payouts to homeowners. And as insurance companies lose money, they’ve been raising premiums to make up for the costs or dropping coverage outright, leaving homeowners in high fire-risk areas with tough decisions to make about whether to risk staying or whether they can afford to move. California’s insurance commissioner will have to try and find a way to keep insurance affordable enough for people to buy it, but priced high enough that the companies have enough money to pay out claims.
Who we spoke to for this piece
Robert Stern, past President of the Center for Governmental Studies
The candidates
This section was republished from CalMatters' 2022 Voter Guide.
In 2018, Democratic state Sen. Ricardo Lara defeated Steve Poizner, who ran as an independent but was a Republican when he served as the insurance commissioner from 2007 to 2011. Lara became the California’s first openly gay statewide officeholder.
In 2020, the pandemic kept many Californians off the road, reducing accident claims for auto insurers. Lara directed the companies to refund some premiums, saving customers more than $2.4 billion, according to the insurance department. Advocacy group Consumer Watchdog estimates that drivers are still owed more — $5.5 billion according to their analysis — from overcharges during 2020. Lara also temporarily blocked companies from dropping home insurance policies in fire-prone areas, backed an unsuccessful bill to force insurance companies to cover homes in those areas that are protected up to state standards, and proposed rules to require companies to offer discounts to homeowners who protect their homes.
Lara has also generated some scandal. First, it was for accepting campaign donations from people in the insurance industry after pledging not to, including from an executive of a company that had a case pending before the department. Then, it was for renting a second residence in Sacramento, where his work as commissioner often takes him, and sticking taxpayers with the bill.
Democratic Assemblymember Marc Levine, Lara’s most prominent challenger, is aggressively going after Lara. Levine accuses Lara of not doing enough to protect homeowners in wildfire areas from losing their coverage. Levine’s campaign also created a video and sent out mailers attacking Lara for taking donations from the industry. Levine has a lengthy list of campaign promises, which include ordering insurance companies to return money to consumers from pandemic overcharges and barring companies from taking customers’ education and occupation into account when pricing their auto insurance coverage — a loophole that the department has also proposed regulations to close.
Lara’s campaign sent out mailers criticizing Levine’s voting record on labor issues. Lara has garnered endorsements from the California Democratic Party, California Environmental Voters, Gov. Gavin Newsom, U.S. Sen. Alex Padilla, as well as labor groups and other state and national officials. Levine’s endorsements include Amar Shergill, chairperson of the California Democratic Party Progressive Caucus; M. Ronald Cohen, chairperson of the California Democratic Party Veterans Caucus; and the California Nurses Association.
Vinson Eugene Allen, Medical Doctor/Businessman (Democratic)
Campaign website: electdrallen2022.com/
Endorsements: See full list of endorsements
Campaign finance: See all campaign contributions via the California Secretary of State website
Greg Conlon, Businessman/CPA (Republican)
Campaign website: gregconlon.com/Endorsements: none listed
Campaign finance: See all campaign contributions via the California Secretary of State website
Veronika Fimbres, Nurse (Green)
Campaign website: veronika4ca.com/
Endorsements: See full list of endorsementsCampaign finance: See all campaign contributions via the California Secretary of State website
Read more about Fimbres’ policy priorities and experience at Voter’s Edge
Robert Howell, Cybersecurity Equipment Manufacturer (Republican)
Campaign website: electroberthowell.com/
Endorsements: none listed
Nathalie Hrizi, Teacher/Union Officer (Peace & Freedom)
Campaign website: hrizi4commissioner.com/
Endorsements: The Party for Socialism and Liberation
Jasper "Jay" Jackson (Democratic)Campaign website: none found
Endorsements: none listed
Ricardo Lara, Insurance Commissioner (Democratic)
Campaign website: ricardolara.com/
Endorsements: See full list of endorsements
Campaign finance: See all campaign contributions via the California Secretary of State website
Marc Levine, Member, California State Assembly (Democratic)
Campaign website: marclevine.org/Endorsements: none listed on his website, but he has been endorsed by the L.A. Times and San Jose Mercury News
Campaign finance: See all campaign contributions via the California Secretary of State website
Robert J. Molnar, Healthcare Advocate/Businessman (No Party Preference)
Campaign website: robertjmolnar.com/Endorsements: none listed
Campaign finance: See all campaign contributions via the California Secretary of State website