(Photo: Stacy A. Korsgaden)
CA Department of Insurance: A Warning Shot to Every Free Market Believer
The bloated and broken Department of Insurance has devastated the insurance market and driven the state to the edge of collapse
By Stacy Korsgaden, May 18, 2025 8:09 am
Californians are waking up to a hard truth: the Department of Insurance, bloated and broken, has become a hostile force in the state’s economy. Under the failed leadership of Commissioner Ricardo Lara, this out-of-control bureaucracy has devastated the insurance market and driven the state to the edge of collapse.
What was once a department designed to foster fairness and oversight has morphed into a political weapon: slow-moving, expensive, and utterly disconnected from reality. It no longer serves consumers. It punishes businesses, bullies carriers, and micromanages private industry into submission. The result is chaos, uncertainty, and a chilling message to every company watching from the sidelines: stay out of California.
After the worst wildfire disaster in our nation’s history, State Farm, the largest insurer in America, requested a 22% rate increase to cover unprecedented risk and surging reinsurance costs. The Department said no. Why? Because optics and politics matter more than solvency. When a watered-down 17% was finally approved, it was too little, too late. And when State Farm asked for another 30% in 2024, the Department brushed it aside, promising to “review it” sometime in 2025. They still haven’t.
Meanwhile, the financial bleeding continues. In Q1 of 2025, State Farm reported a $5.1 billion underwriting loss, which is their worst in at least 20 years. State Farm General, their California subsidiary, lost $600 million. Their reinsurance arm lost $1.1 billion. A judge overseeing the rate case said what the Department refused to acknowledge: State Farm is no longer profitable in California. The judge even recommended a $400 million capital injection from the parent company just to keep the doors open.
And what if that capital doesn’t come? What if they walk away?
The market craters. Coverage vanishes. The Department of Insurance shrugs. And the same machine that created this crisis moves on, unaccountable and unchanged.
This is not leadership. This is government at its worst: bloated, arrogant, and actively harmful to the people and companies it was created to serve.
California doesn’t need more regulation. It needs reform. Real reform. It needs leaders willing to take on the Department itself and restore a functioning, competitive marketplace built on transparency, innovation, and economic common sense.
If no one steps up to clean house, there won’t be a house left standing. It’s time for someone with vision and backbone to step in.
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
- CA Department of Insurance: A Warning Shot to Every Free Market Believer - May 18, 2025
- Rebuilding the First Pillar: Get Government Out of the Way - May 12, 2025
- Rebuilding the Pillars of California’s Insurance System - April 2, 2025
The insurance industry under corrupt Insurance Commissioner and Partying Taxpayer-Funded World Traveller Ricardo Lara is obviously devastatingly more of a mess of a collapse than it was before his arrival, and only gets worse by the day, as we’ve seen. Our politicians in general —- apart from even corrupt Lara; for example let’s also point accusingly at Newsom and his super-majority Dem legislature — are responsible for insurance companies leaving California, either through forest mismanagement (and thus yearly multiple fire-nados that require HUGE insurance payouts), over-regulation, a horrible business climate in which politicians gleefully and recklessly punish everyone but themselves, an agenda of CA destruction through crime, homelessness, and the rest, and thus all of the insurance liabilities for the fallout of property loss, etc.
So I appreciate Stacy Korsgarden’s attempt to clarify what’s wrong and what’s needed. But as part of a group of homeowners who were dropped from homeowner’s insurance after paying thousands and thousands over decades, without ever having ONCE filed a claim, and offered as a replacement some no-name fly-by-night insurance company without so much as a “sorry to see you go, thanks for the enrichment over the years” my husband and I wonder to what extent insurance companies also share blame for abandoning their duties, beyond the rock and the hard place into which they have been wedged because of damage done to the industry from the lefty leadership of the state of California.
Still trying to figure it out. Corrupt, ignorant, who-me? Insurance Commissioner Ricardo needs to GO, for sure. But will that largely fix it? Who even knows at this point. It’s a MESS.
Stacy sums it up accurately here. Like every Democrat politician in this state, Insurance Commissioner Lara is completely incompetent. No one should be losing insurance in this state. None. They should just shut down the Insurance Commission, and start over.
If you want to see how these incompetent politicians get into office, look at their campaign donors. It’s a bunch of unions, lawyers, LGBTQ+. I don’t see one donor here who has any interest in having healthy insurance market.
1 Cordoba Corp $16,200
1 Professional Engineers In California Government $16,200
3 United Food & Commercial Workers International Union / Ufcw $15,500
3 California Real Estate Crepac- California Association Of Realtors $15,500
5 California Professional Fire Fighters Association $11,000
6 Laborers Union $9,500
7 Plumbers & Pipefitter Local 250 $9,300
7 Southern California Pipe Trades District Council 16 $9,300
9 Operating Engineers (Unidentifiable) $8,100
9 Lesbian Gay Bisexual Transgender Caucus Leadership Fund $8,100
11 Bicycle Hotel & Casino $7,741
12 Honor $5,877
13 Mayes Law Offices $5,000
13 Comcast Corporation & Nbc Universal $5,000
You’re right, Protect Freedom, and thanks so much for posting this list of self-interested Ricardo Lara donors.
Does anybody competent want this job? We need a candidate calling stupid stupid everyday. In this case I think you could call it criminal. Just my opinion. Steve Hilton can’t do it by himself. If we’re not careful the Democrats will continue playing musical chairs when they have to find a new job because of term limits. Lara is obviously incompetent and yet he has been elected to this position twice and thinks he wants to run for Lieutenant Governor.
This is personal to my family and the ones around me, as all of us lost or were warned we were going to lose our coverage simply because costs are too high in California.
Hoping Steve Hilton and other candidates can drive this issue and others to elected office.
Just a note to those who state they have never made a claim. That is how the system works. If every policy had claims made against it, the system collapses. The system operates, in theory, by selling 100 policies and projecting that only a few will make claims. So your premium goes to pay the claims of others (and some of it is taken in profit by the insurer). Also remember that the cost of labor and building supplies has continuously increased. Therefore, insurance premiums have to increase to keep up with the rebuild costs.
Thanks, Bob, I do understand how insurance works, or is supposed to work, before “insurance” started covering teeth cleaning and such, which it was never designed to do.
Untold numbers of those devastated by the Palisades and Eaton Fires, which killed 30 people and destroyed or seriously damaged 18,000 homes and other structures, were unceremoniously dropped from their homeowner policies right before the fires. I suppose one day we will see what those numbers are as well as the reasons for the interesting timing. Probably a coincidence….
Right now we are about a million miles away from a free market. Government regulation and manipulation combined with industry collusion results in catastrophic messes like we have now. I don’t believe for a second that SF and others are innocent bystanders.
This applies to virtually all sectors of the economy not just insurance.
“Never in the history of the world has there been a situation so bad that the government can’t make it worse.” Henry Morgenthau, Jr. (FDR’s Secretary of the Treasury)