Los Angeles fire survivors want CA insurance chief Ricardo Lara to resign

from Levi SumagasaiCalMatters

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Survivors of the deadly wildfires in Los Angeles County, some of whom have been unable to recover because their insurance claims were delayed or denied, are calling for California Insurance Commissioner Ricardo Lara to resign.

Lara, a former state lawmaker, has one year left in his second term.

A recent New York Times op-ed article detailing the loopholes the insurance industry can exploit Lara’s plan effort to improve insurance availability in California was the final straw, fire survivors said. They said it proved Lara helped the insurance industry more than he helped policyholders.

Lara and others told their plan, which officially unfolded just days before the fires in the Los Angeles area in January, is in the early stages and will take time to work.

Jill Spivak, a State Farm policyholder whose home burned in the Palisades fire, said at a news conference Thursday that she was unable to rebuild it.

“We feel alone, we feel forgotten,” she said. She implored Gov. Gavin Newsom to replace Lara. “Californians deserve an insurance commissioner who protects families, not insurers who cause harm,” Spivak said.

Lara—who is also standing allegations of improper spending of taxpayer dollars for travel — told CalMatters in an interview that he has no plans to resign.

“I understand the anger (of the fire victims),” Lara said. “I’m disappointed in the pace of the recovery, which involves multiple agencies, multiple levels of government.”

He mentioned the actions he had taken in response, which included the launch of the insurance department in June official State Farm investigation over the processing of fire claims in the Los Angeles area; lawsuit against the FAIR planstate fire insurer of last resort; and a bulletin requiring insurance companies to fully investigate and pay smoke damage claims.

Some of them say that Lara’s efforts are not helping the survivors fast enough. On a website the group that recently began calling for Lara’s resignation, the Eaton Fire Survivors Network, linked to surveys that say 70 percent of policyholders face delays and denials and that 61 percent expect to lose home coverage within months. They want the investigation to be expedited. They want Lara to pause approvals for rate increases in the meantime.

Why a survivor wants Lara out

Andrew Wessels is still waiting to return to his Altadena home, which did not burn down but was damaged. he first spoke to CalMatters in Maywhile fighting State Farm to test his home for toxins because he didn’t want to move his two children back into a potentially unhealthy environment.

He told CalMatters on Friday that he is still waiting for more tests ordered by the insurer while he decides what he wants to pay for. He expects to have to wait until next year before he and his family can actually rebuild. But he feels lucky that he, his wife and kids have found a semi-permanent home after scrambling around in Airbnbs since the fire. They’re now three months into an 18-month lease that State Farm is paying for, and he’s breathing a little easier because he’s “not packing up every few weeks.”

He joins the call for Lara’s resignation. He said the state insurance department recently closed his complaint about State Farm’s handling of his claims based solely on the company’s word for it — without asking him first.

“The latest information provided by the insurer is that the matter you originally brought to our attention is currently in stable condition,” the department’s Oct. 8 letter said.

“It was particularly troubling that it closed without talking to me,” Wessels said. “They’re supposed to represent me. I think that speaks to who the Department of Insurance really serves.”

He appealed and asked two of his staff members to contact the department on his behalf, and he renewed his appeal.

“It was also troubling that ‘if State Farm says it, it must be true,’ as the department is investigating (the insurer) for illegal practices,” Wessels added.That proves change is needed, he said.

Newsom spokeswoman Tara Gallegos and the governor’s office did not respond to repeated requests for comment on calls for the governor to replace Lara.

Nicole Ganley, a spokeswoman for the Casualty Insurance Association of America, said the industry group would not comment on efforts to remove Lara. She pointed to a letter to the editor the group sent to the New York Times that countered the story about insurers reportedly taking advantage of loopholes in the commissioner’s new regulations by avoiding writing policies in certain areas, then turning around to ask to raise their premiums anyway.

“The reforms are recent and their impact is still unfolding,” the letter reads in part. “The assumption of failure at this stage misrepresents the facts and risks undermining public confidence in a strategy designed to stabilize coverage in high-risk areas.”

“There is no magic wand” for an insurance crisis

Carmen Balber, executive director of Consumer Watchdog, the Los Angeles-based nonprofit that has often clashed with Lara, was also at the press conference. Throughout his tenure, her organization has questioned his insurance connectionsstarting in 2019 when Lara received and returned campaign contributions from industry. He ran for office promising not to take money from companies he would regulate.

The organization is also the main participant in insurance rate reviews, meaning it often challenges insurers’ proposed rate increases and changes. A public hearing is scheduled for November 20 to discuss Lara’s proposed changes to the intervention process, which Consumer Watchdog has characterized as the commissioner’s revenge.

“What we’ve seen happen over the last few years is that things are getting worse for consumers, not better,” Balber told CalMatters before the news conference. “We need someone new in charge who will hold the industry accountable to its promises.”

But Amy Bach, executive director of the San Francisco-based consumer advocacy group United Policyholders, said she was “sorry to see the energy being spent in this direction.”

She said there are legal, regulatory and other efforts trying to improve the state’s home insurance market and that appointing another commissioner is unlikely to speed things up. “There is no magic bullet that will solve the insurance challenges that are plaguing wildfire survivors in Los Angeles and driving premiums unreasonably high across the state,” Bach said.

Robert Herrell, a former deputy insurance commissioner under Lara’s predecessor, also used the magic wand analogy. As climate disasters and risks increase, there is no easy solution to what is ailing property insurance in this state, the nation and the rest of the world, he said.

Still, he said survivors need a strong commissioner to stand up to the insurance industry. “It’s not that commissioner,” said Herrell, who is now executive director of the nonprofit advocacy group Consumer Federation of California. “Just because he says every time he takes action it’s for consumers doesn’t make it true.”

Bach said Lara had to find a way to balance competing interests: “No previous commissioner has faced the market conditions he’s facing, so it’s hard to say whether a tougher approach would work better than what he’s trying to achieve.”

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.