LA fire survivors urge for resignation of state insurance commissioner

Ricardo Lara

Survivors of the Eaton and Palisades fires Thursday urged Gov. Gavin Newsom to call for the resignation of California Insurance Commissioner Ricardo Lara -- a request that comes on the heels of a new report that found a 2023 plan struck between the commissioner and insurers resulted in more policyholders being dropped ahead of January's emergency.

On Thursday morning, a group of fire survivors led by the Eaton Fire Survivors Network gathered outside Good Neighbor Bar in Altadena to discuss the report. Fire survivors requested immediate aid from Newsom as they navigate recovery and face barriers from insurers.

The network consists of more than 8,500 people who were impacted by January's wildfires -- mainly from Altadena, but the organization has gained some members from Pacific Palisades as well.

"Families can no longer buy or renew coverage, and those who still have it can't access the benefits they've already paid for," Joy Chen, executive director of the network, said. "Californians can't afford another year of failed oversight. This crisis now sits on the governor's desk. Gov. Newsom should call for Commissioner Lara to resign and install leadership that enforces the law and restores public trust."

The New York Times published a report Tuesday detailing how the deal changed the insurance landscape.

In 2023, various insurance companies had announced plans to depart from California's market. Lara reached a deal with insurers, which incentivized insurers to remain in the state in exchange for future rate hikes. The agreement sought to ensure insurers would write policies in fire-prone areas at a rate equal to at least 85% of their market share across the state.

The report examined data after those rules were enacted, finding that enrollment in the state's FAIR Plan doubled as insurers dropped far more policyholders in fire-prone areas than promised.

Companies dropped policyholders in "distressed" zipcodes while writing policies for homeowners located in lower-risk neighborhoods inside larger high-risk fire-prone areas, and still qualified for rate increases, according to the report.

Homeowners who signed up for the state's FAIR Plan often paid more for less coverage. The state's plan is a fire insurance program created in 1968, giving homeowners coverage who cannot find private market insurance.

Lara's office issued a statement Saturday, calling the report a "welcomed story," highlighting how insurance companies and outside groups are attempting to manipulate new regulations. His office noted that more action may be needed to reduce the FAIR Plan's growth.

The office also noted Lara and the California Department of Insurance collaborated with The New York Times for months for the report, and provided extensive background information, interviews and access to data and research.

"All eyes are on insurance companies right now, including mine. We build the Sustainable Insurance Strategy with an understanding that insurance companies and intervenors would prod and probe for loopholes they think they can exploit," Lara said in a statement. "This is not a surprise to anyone that has dealt with them. If it is, welcome to Earth."

Five insurers have committed to stay and expand in California, with rate increases averaging 6.9%. The department is expected to review these rate filings in a public, transparent process so Californians do not pay more than is required, state officials said.

Consumer Watchdog Executive Director Carmen Balber criticized Lara and his "secret deal," which she said could only be resolved by Gov. Newsom.

"When the regulator becomes the industry's business partner, consumers lose," Balber said. "Commissioner Lara's deal with insurers gave them a reason to abandon California families and double the size of the FAIR Plan."

"Despite Lara's promises, insurance companies will get big rate hikes but don't have to sell a single new policy in wildfire-risk areas," Balber added. "Gov. Newsom must step in and appoint a commissioner who will stand up to the insurance industry, enforce the law, and get consumers the benefits they've paid for."

Meanwhile, fire survivors pleaded for Newsom to assist them and step in to address insurance issues by appointing a new commissioner. Several of them reported negative claims experiences, and yet rate hikes for insurers were approved.

"After the fire, I thought we were protected -- we'd paid State Farm for 25 years. But the real disaster was the endless maze of delays and denials," Jill Spivack, said a longtime Pacific Palisades resident, whose home burned down in January.

"I had to put my business on hold just to fight for what we'd already paid for. Governor Newsom, your words gave us hope. Now we need your actions to make that hope real. Californians deserve an insurance commissioner who protects families, not the insurers doing the most harm," Spivack added.

Branislav Kecman, an Eaton Fire survivor, said he had paid premiums to State Farm for 12 years before being dropped months before. He eventually signed up with the state's FAIR Plan.

"That was painful enough," Kecman said. "But what's truly devastating is learning that our own insurance commissioner secretly cut a deal that encouraged insurers to drop families like ours. We thought we could trust the system. We never imagined we'd be betrayed by the very person elected to protect us."

The Eaton Fire Survivors has documented what they say is nearly 500 firsthand accounts of insurer misconduct. The group also delivered a five-step enforcement plan to Lara to stop insurers' bad behavior.

Fire survivors launched a petition in an attempt to persuade Gov. Newsom to replace Lara, which can be viewed online at lararesign.org.

"California cannot afford another year of Ricardo Lara. We call on Gov. Newsom to act now: urge Commissioner Lara to resign, and install new leadership that enforces the law and rebuilds a functioning insurance market," Chen said in a statement.