Eaton and Palisades fire survivors on Thursday, Nov. 6, are calling for California Insurance Commissioner Ricardo Lara to resign after a report revealed what it said were loopholes in a 2023 plan that resulted in more policyholders being dropped ahead of January’s disasters.
The survivors, from the Eaton Fire Survivors Network, gathered at Good Neighbor Bar in Altadena, where they sounded off on the New York Times report, which detailed how the deal between Lara and insurers changed the insurance landscape. Along with the call for Lara’s job, they requested immediate aid from Newsom as they navigate recovery and face barriers from insurers.
Eaton Fire Survivors Network Executive Director Joy Chen said that fire survivors’ experience is “a warning for every Californian who pays insurance premiums and expects the companies that they’ve been paying for 20 or 30 years to honor their contracts.”
“Families can no longer buy or renew coverage, and those who still have it can’t access the benefits they’ve already paid for,” Chen 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 2023 deal was billed as a “historic” compromise that would reward insurance companies with higher rates in exchange for protecting homeowners in areas distressed by climate change, including more fire-prone regions.
But the investigation found that “vast swaths” of the areas where insurers must write new policies did not overlap with what the state’s fire marshal deemed to be the most fire-prone.
Under the deal, insurance companies would have to write policies in fire-prone areas at a rate equal to at least 85% of their market share across the state. Industry lobbyists “quietly negotiated” a pair of “offramps” as an alternative to the 85% rule, which allowed for a lower bar at which insurers could drop customers.
The report examined data after those rules were enacted, finding that enrollment in the state’s FAIR Plan – a fire insurance program created in 1968, giving homeowners coverage who cannot find private market insurance — 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.
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.
On X, Lara said “we built the Sustainable Insurance Strategy knowing that insurance companies and intervenors would prod and probe for loopholes they think they can exploit. This is not a surprise to anyone that has dealt with them. If it is, welcome to Earth.”
Eaton fire survivor Branislav Kecman said his family paid premiums to State Farm for 12 years, but was dropped a few months before the fire, forcing them onto the state’s FAIR Plan. He said it was “truly devastating learning that our own Insurance Commissioner secretly cut a deal that encouraged insurers to drop families like ours.”
What happened to families like Kecman’s is a direct result of Lara’s deal, said Carmen Balber, executive director of Consumer Watchdog, and insurers have dropped far more policies than they have promised to increase.
The Times investigation found that in the six months after the deal was announced, California’s three largest insurers told the state they intended to dump 50,000 existing policies, which was five times the amount filed by those companies in the 20 months before the wildfires.
“In every respect, the insurance prices have gotten worse because of what Lara did. Not better,” said Balber.
Consumer Watchdog President Jamie Court argued that Commissioner Lara’s plan “incentivized insurance companies to dump Eaton and Palisades homeowners prior to the fires and pushed them onto the low-benefit, high-cost FAIR plan.”
Chen’s message to state leadership, as the leader of a sprawling 8,000-plus-member fire survivor group, is that “when insurance fails, recovery fails.”
Altadena community organizer Zayir Calvin said it’s “like paying for a car, then someone taking the car away from you, telling you that you don’t deserve it.”
Survivors on Thursday called for Lara to step down, and if he doesn’t Gov. Newsom should go to the state Senate to file articles of impeachment against him.
“The failure of California’s insurance market will be devastating for Californians. We will have to bear that pain,” said Balber. “And the governor should keep in mind that it will be devastating to his political ambitions as he seeks national office.”