Kim and Allen will go before the CA Insurance Commissioner

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For the first time since California’s insurance commissioner became an elected position, two Democrats will compete for the post in November.

The top two candidates in the June primary were former San Francisco Board of Supervisors member Jane Kim and state Sen. Ben Allen, who received approx. 27% y 20% from the vote, resp. One of them will succeed Ricardo Lara, a former Democratic lawmaker who served two terms as insurance commissioner. Lara has led the Department of Insurance for the past eight years, a period in which the state has suffered the deadliest and most devastating wildfires in its history.

Either Kim or Allen will face huge and complex challenges that will affect local communities, people’s ability to buy homes and start businesses, and the state’s economy.

In recent years, insurance companies have stopped issuing new policies or renewing old ones, especially in high-risk areas, citing the growing risk of wildfires due to climate change and inflation stemming from the COVID-19 pandemic. That prompted homeowners to turn to the FAIR plan, their last resort, which by law must provide fire insurance. The plan, run by an alliance of insurers, grew to more than 684,000 policies in force as of March, a 152% increase from September 2022. It has alerted to his ability to continue paying compensation after major disasters .

Proposition 103, a law approved by voters in 1988, gave, among other things, the power to the elected commissioner to approve rate increases. That hasn’t allowed Treasury rates to rise too much over the years—Californians’ home insurance premiums have is maintained at an average level national level, but this may change. Last year, the commissioner implemented regulations that include new factors that insurers can use in setting their premiums, such as crash patterns and reinsurance costs. Some companies have requested and received approval to increase their rates, so they are starting to issue policies again.

Ensuring that insurance is available but affordable will be the most pressing issue for both Kim and Allen, whose responsibilities will also include regulating auto insurance, pet insurance and some aspects of health insurance, in addition to workers’ compensation.

Another issue that requires special attention is ensuring that insurance companies pay out claims on time to help communities recover from damage. The fires in the Los Angeles area have highlighted insurer practices that delay and deny claims, as well as underinsurance and a lack of smoke damage standards that have delayed recovery . Upcoming legislation — like the one pushed by Allen, whose district was hit by wildfires last year — and lawsuits will address some of those issues. The well-organized survivors of the fires that They asked for Lara’s resignation because of their department’s response to their concerns, they will surely continue to put pressure on his successor.

Below, we look at each candidate’s background and how they would approach the position, based on their interviews with CalMatters and what they’ve said publicly, including in candidate forums.

Jane Kim

Kim’s proposal to create “universal natural disaster insurance,” inspired by a program in New Zealand, has attracted a lot of attention. Their plan is to finance this system with a portion of the insurance premiums that the insurance companies will collect and transfer to the state. This in turn will ensure fire and flood cover, while insurers will continue to cover other risks.

Critics, including consumer advocates, have questioned why he has not disclosed details of the amount of capital such a fund would require. Kim told CalMatters that would have to be studied, but that essentially his proposal would generate revenue.

Opponents of his proposal, too They say it’s a bad idea shift the burden of catastrophes onto the state, citing what they see as a failure to separate earthquake insurance from home insurance: the majority of California homeowners now have no insurance coverage.

“We (taxpayers) are already footing the bill,” Kim said. “When insurers and utility companies refuse to pay, they just pass it on to us. Risk sharing is important.”

Kim also told CalMatters that an idea proposed by Republican commissioner candidate Merritt Farron — that the state create a reinsurance authority to incentivize insurers to write policies in the state — “may prove to be a more effective model.”

Among Kim’s short-term priorities if he wins are:

• Create public dashboards that show how insurance companies spend policyholders’ premiums and reflect their claims history.
• Expand eligibility requirements for a program that offers low-cost insurance to drivers who earn less than $38,000 a year.
• Match the company’s ability to sell auto insurance in the state with its willingness to issue homeowners policies.
• Let’s make the FAIR plan more transparent by requiring the list of board members to be public and board meetings to be public.
• Rate freezes when policyholders make claims.

Her accomplishments include being a former elected official of San Francisco, a lawyer by profession free community college education for the inhabitants of the city; the first state ordinance establishing a $15 minimum wage ; and one tenant protection ordinance aimed at avoiding unfair evictions. She served as the California Director for the 2020 US Presidential Campaign for Senator Bernie Sanders and most recently as the California Director for the Working Families Party.

Kim has a long list of supporters, including multiple unions such as SEIU California. In addition to Sanders, another US lawmaker, Representative Ro Hanna of Silicon Valley, has also thrown her support behind him.

Ben Allen

The state senator, whose term in the legislature is expiring, wants to bring together the state, insurers, construction companies, local governments and firefighters to work on strategies to reduce the risk.

“I think ultimately that’s how we’re going to get out of this mess,” he told CalMatters.

What he calls a comprehensive approach involves thinking about where people live and build: “We shouldn’t be building new, irresponsible buildings in high-risk areas. We should be looking for ways to carefully and sensitively encourage people to move away from those areas.”

If he wins, Allen’s other plans include:

• Create a consumer advocate position in the insurance department and increase staff to serve customers.
• Require insurers to explain claim denials and provide real-time reporting on delayed and unsettled claims after a disaster.
• Increase oversight of the FAIR plan and ensure it complies with the Commissioner’s orders.
• Ban the insurance commissioner and his staff from working for the industry as soon as they leave the department.

Allen highlighted his experience as a legislator, including drafting and passing bills related to insurance company accountability. for example, law that he wrote now requires insurers to pay 60% of contents coverage to policyholders without a detailed inventory and gives consumers more time to provide such an inventory. He also points out that he drafted Proposition 4, the bond measure approved by state voters in 2024 “to access safe drinking water, prevent wildfires and protect communities and natural spaces from climate risks.”

Other pending bills he authored include one that would require insurers notify owners 90 days in advance if they do not wish to renew their policies along with a clear explanation. another project will penalize insurance companies not to correct their practices after the insurance department found that they violated laws and regulations.

Allen also has numerous supporters, including those of the two leaders of the state legislature, Senate President Pro Tempore Monique Lemon and Assembly Speaker Robert Rivas. U.S. Sens. Adam Schiff and Alex Padilla, both of California, as well as unions and the California Consumer Federation, also support it.