Insurance Commissioner Ricardo Lara. (Photo: Kevin Sanders for California Globe)
Fixing California’s Broken Insurance System
California’s foundation is cracking under the weight of poor leadership – political ambition overriding practical governance
By Stacy Korsgaden, February 27, 2025 4:20 pm
In recent developments, California Insurance Commissioner Ricardo Lara has denied State Farm an emergency rate increase of 22% for homeowners insurance. This decision, while seemingly consumer-friendly on the surface, spells disaster for the largest insurer in the state, and by extension, for countless Californian families.
Let’s examine the facts using the Rotary Club’s 4-way test: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned? Lara’s actions fail this test spectacularly. Denying the rate increase under the pretense of protection is a self-serving maneuver by a government official aiming higher in his career, not an act of altruism. This decision puts State Farm in a dire financial predicament, forcing it to consider drastic survival measures.
Should State Farm be forced to withdraw from California, families would be pushed towards the Fair Plan—a scheme offering limited coverage at higher costs. This is the direct result of political ambition overriding practical governance. State Farm itself has stressed that its survival hinges on matching prices with financial risks, something Lara’s current policies hinder.
The true issue at hand goes beyond climate change—the usual scapegoat. The heart of the matter lies in excessive government intervention and mismanagement. For years, our thriving insurance industry has been undermined by increasing regulatory burdens and governmental overreach, shifting focus away from critical issues like land and fuel management, crime, and economic regulation.
Insurance remains a cornerstone of any solid financial strategy, vital for both individuals and the state alike. California’s foundation is cracking under the weight of poor leadership. It’s time for change. We need leaders who will repair our systems, not politicians who use them as stepping stones for their careers. We need new leadership to secure a stable and prosperous future for California’s insurance industry.
a President's Council agent for 14 years of her career, one of the top 150 agents in the country out of 15,000 agents at the time. She is still a licensed insurance agent, but focuses today as a financial advisor. Stacy can be reached at Stacykorsgaden@gmail.com
- Fixing California’s Broken Insurance System - February 27, 2025
- Systemic Mismanagement in California’s Insurance Sector - February 3, 2025
- Weak Leadership is Failing California’s Insurance Market - July 3, 2024
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Thank you for the informative read.
When Congressman Kevin Kiley was California Assemblyman, he hosted a town hall in El Dorado County inviting Insurance Commissioner Lara to attend. The meeting hall was packed with concerned homeowners struggling for affordable coverage after the King and Sand wildfires in 2914 (and before the devastating Caldor Fire). He listened to the outrage recounted of cancelled policies, unaffordable premiums and hardships. Supervisor Frentzen expressed concerns regarding losses of property taxes if homeowners were forced to pay for expensive coverage.
Lara made a feeble effort to reassure the audience that accommodations would be made, but left early as if more important matters needed his attention.
So if the Insurance Commissioner is not serving the public and resisting insurance companies what is his purpose?
Are insurance companies lobbying legislators to provide resources (water, firefighters, equipment and the mobilization to reduce dry vegetation that fuels wildfires?