Insurer profits boost investors but hurt customers

By Jane Kim, especially for CalMatters

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As the first anniversary of Southern California’s devastating wildfires approaches, CalMatters asked candidates for the 2026 state insurance commissioner race to share thoughts on what the state can do to help victims and stabilize insurers. This is the seventh answer. Read other candidates’ answers here, here, here, here, here and here.

California’s insurance system is failing. Premiums are too high. Insurance companies cancel coverage or fleeing the country. Even if you have insurance, these companies fight your claims at every turn, appointing and reassigning multiple adjusters to delay repairs and reconstruction.

The state does a good job of regulating consumers: We require Californians to have insurance to drive to work, open a small business or take out a mortgage to buy a home. This is how insurance ultimately plays a huge role in who builds wealth in our country.

For this reason, insurance should be affordable and accessible to all. Otherwise, we are cutting Californians out of the economy.

We need to rethink and redesign insurance to make it work for all of us. And that means going up against the $3.3 trillion publishing industry hit profits for shareholders and executives. In fact, CEOs of the 10 largest insurance companies earned $391 million in the last three years.

Modern insurance companies make money by investing premiums in the stock and bond markets. When insurance companies are financial firms first and defense systems second, the incentives are clear: deny or delay claims, reduce coverage through fine print, penalize people for filing claims, and flee communities once the math stops favoring astronomical profits.

California has strong consumer protections enacted by advocates and voters. But these regulations alone don’t help when insurers opt out — and anyone with a home, car or business can’t.

I’m running for insurance commissioner to come up with big ideas to address this failure of the private market.

We need natural disaster insurance for everyone. This universal, affordable disaster insurance program will also invest in climate resilience and infrastructure across the country. A universal system — which currently exists in countries such as New Zealand and France — stabilizes coverage, prevents mass cancellations and creates a pool big enough to deal with natural disasters. It also allows California to invest directly in mitigation and resilience—the kind of long-term risk reduction that private insurers have no mandate or incentive to invest in. And it eliminates liability coverage that insurers say is driving them out of California, stabilizing a market in crisis.

We also need to do more to curb CEO pay and excessive insurance profits. Californians are being asked to accept higher premiums and worse coverage while insurance executives pocket tens of millions of dollars and companies use our premiums as an investment engine. When claims are denied or delayed, that’s not a problem—it’s a business strategy. We can do a much better job of reining in profits and price gouging, and that is essential to restoring confidence and affordability.

Some will say that these ideas are too ambitious. But the truth is that the current system is too expensive and does not protect Californians and our most valuable assets: our homes, our cars, our businesses and our health.

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