Insurance Commissioner Ricardo Lara is emerging as an unexpected figure in California’s ongoing insurance crisis, earning praise for his efforts to stabilize the market amidst criticism and challenges like devastating wildfires.
The Roots of the Problem
At the heart of the issue lies Proposition 103, a 1988 ballot initiative that granted the insurance commissioner power to approve and roll back rates. This price-controlled system has made it difficult for insurers to set rates reflecting the true risk, causing many to exit the market as wildfire costs have skyrocketed. Prior to recent events, California property owners already struggled to find insurance, leading many to rely on the FAIR Plan, the insurer of last resort, which teeters on insolvency.
Progress and Key Reforms
The situation, however, is showing signs of improvement. In March of 2025, news indicated that several insurers, including Farmers, Mercury, AAA SoCal, USAA, Nationwide, CSAA, and Allstate, planned to expand coverage in the state. State Farm, the largest property insurer, also planned to halt cancellations and non-renewals after a recent rate increase. This progress did not happen by chance.
Lara’s Sustainable Insurance Strategy, which went into effect in December, is credited with these positive developments. This strategy allows insurers to utilize catastrophe models in rate determination, a necessary adjustment in the face of climate change, and to factor in rising reinsurance costs.
In addition, Lara is working to expedite the rate-review process, which had become a costly and time-consuming burden. He’s pushing for a 60-day review timeline and implementing a plan that requires insurance department officials to provide detailed justification if they cannot meet that deadline. Lara is the first commissioner to embrace these common-sense reforms.
Addressing the Crisis
Moreover, Lara has detailed how insurance companies are assessed if the FAIR plan collapses, allowing them to prepare accordingly. He has approved all requested rate hikes, though not always at the full amount or as quickly as insurers would prefer. While no consumer welcomes higher prices, such measures are necessary to prevent insurers from leaving the state. The goal is to have affordable policies instead of no policies.
Prop. 103 not only forbids excessive rates, but it also forbids inadequate ones, which makes it a complicated directive during a crisis caused by government-mandated price caps and wildfire catastrophes.
Navigating Criticism
Lara has faced criticism from groups like Consumer Watchdog, which has a vested interest in the current price controls. He has also been criticized for attending the Bermuda Risk Summit to discuss insurance issues.
Despite the challenges, Lara announced he would take on intervenor compensation and no longer let consumer activists hold rates hostage during his time at the summit.
While Lara’s prior actions, such as co-authoring a single-payer healthcare bill and imposing a moratorium on automobile rate hikes, have drawn criticism, he is now spearheading efforts to stabilize the state’s insurance market.
Steven Greenhut is Western region director for the R Street Institute and a member of the Southern California News Group Editorial Board. Write to him at [email protected].
