Last Friday evening at the United Policyholders charity gathering at DeLoach Vineyards, I expected good wine, good company, and a focus on helping disaster survivors. I did not expect California Insurance Commissioner Ricardo Lara to speak with such candor about the pressures surrounding his office. Lara shared a story from his background in East Los Angeles, recalling how his mother recently urged him to “chin up” and stand tall against criticism when he believed he was doing the right thing for Californians in the long term. That advice, he said, still guides him as he navigates one of the most volatile insurance markets in the country.
He acknowledged that even when those invoking Proposition 103 use the press to question his motives or his commitment to consumers, he will stand for what he believes is right in the long term, regardless of whether it costs him politically. With no press present, it was an unexpected, dramatic explanation of the pressures one assumes as an elected insurance commissioner when claims frequency is high, leaving insurers losing money, and rising rates worrying all constituents.
Proposition 103, passed by voters in 1988, was designed to give Californians a seat at the table in how insurance rates are set. It created a prior-approval system for rate changes and opened the door for public participation, allowing consumer groups to challenge filings and, when successful, recover fees for their efforts. That structure has empowered organizations like Consumer Watchdog to scrutinize insurance rates and regulatory decisions. For decades, they have positioned themselves as the state’s bulwark against excessive premiums, pointing to billions of dollars they say their interventions have saved policyholders.
But the terrain Prop 103 was written for looks very different from today’s landscape. Since 2017, California has been confronting back-to-back wildfire catastrophes, soaring reinsurance costs, and an exodus of private carriers unwilling to write or renew policies in high-risk areas. The state’s FAIR Plan, intended as an insurer of last resort, has ballooned far beyond its original role. As I noted in an earlier blog about the State Farm rate ruling, decisions about pricing and availability are no longer just abstract exercises in fairness; they are questions of solvency and market survival.
I wrote about some of these issues in “A Critical Look at the California State Farm Rate Ruling: A Stabilizing Act or a Regulatory Surrender?” where I noted:
Proposition 103 is the law in California. While many have said it does not work since wildfires struck much more frequently starting in 2017, this law demands that we protect consumers not only with refunds after the fact but with a transparent, accountable process before prices go up. Until that happens, the regulatory system will remain one where promises are made publicly, but the real decisions are made in private, as was apparently done with the insurance commissioner and State Farm executives.
Lara’s Sustainable Insurance Strategy is his current attempt to meet that challenge. It links the use of catastrophe modeling to commitments from insurers to write more policies, seeks to modernize the FAIR Plan, and, in the wake of this year’s devastating Los Angeles wildfires, authorizes surcharges to help shore up the Plan’s finances. Supporters see these steps as pragmatic emergency measures aimed at keeping homeowners insured in fire-prone regions. Critics, particularly Consumer Watchdog, argue that some of these moves skirt statutory limits, shift losses unfairly onto policyholders, and erode the consumer protections voters locked into place with Prop 103.
United Policyholders, led by Amy Bach, has taken a different tack. Rather than criticizing every change, UP has focused on ensuring guardrails are in place, advocating for transparency in catastrophe models, and urging that reforms tie insurer privileges to clear obligations to serve the public and pay claims fully and timely. Their approach highlights that consumer advocacy is not monolithic and must consider the other insurance company party to the public need for a working insurance market. As I see it, and not speaking for United Policyholders, where some see compromise as betrayal, others, such as United Policyholders, see it as a path to long-term stability serving the public good.
Underlying all of this is a fraught debate about the incentives embedded in Prop 103’s fee provisions. Intervenor compensation has enabled Prop 103 groups to build expertise and take on complex cases, but it has also created the perception that some “watchdogs” are rewarded more for winning skirmishes than for collaborating on durable solutions benefiting the public.
Lara has occasionally denied fee requests, citing documentation and insurance stability concerns, which in turn has sparked lawsuits claiming that the Department is chilling public participation. That tension reflects a deeper question about how best to balance transparency, accountability, and timely regulatory action in an era of cascading disasters where insurers are obviously being hammered and losing money. Still, nobody wants to pay for almost unaffordable rates in high-risk wildfire areas.
The lawsuits over FAIR Plan surcharges and the public sparring around rate approvals show how starkly divided the parties have become. Yet Lara’s personal story at DeLoach on Friday night offered a reminder that these disputes are not merely about statutes and spreadsheets. They are about real people trying to preserve access to coverage while protecting policyholders from abuse. The commissioner framed his work as an effort to uphold the long-term interests of Californians, even if that means drawing fire from groups who once stood shoulder-to-shoulder with him. He alluded that those groups provide the media with pithy news articles, trying to portray him as being in bed with insurers rather than discuss the complex issues he faces, which are not suitable for knee-jerk resolutions and may harm the public in the long run.
California’s insurance crisis has forced all sides to confront the limits of a system built almost four decades ago. Prop 103’s participatory ideals remain vital, but they were crafted in a market where wildfires were rare headlines, not annual billion-dollar events. Whether Lara’s emergency measures prove to be sound triage or unlawful cost-shifting will be tested in court and, perhaps more importantly, in the resilience of the market they aim to stabilize. What is clear to me is that the conversation cannot be reduced to slogans about who is or isn’t “pro-consumer.” It demands an honest reckoning with how to preserve both fairness and availability in a state where climate risk is rewriting the rulebook. It requires respectful and studied discourse.
As the debate unfolds, Californians deserve solutions that honor the spirit of Prop 103 while adapting to the demands of the present. That will require watchdogs willing to collaborate, regulators prepared to act boldly but transparently, and a willingness on all sides to see beyond short-term headlines to the long-term security of people living in harm’s way.
All I wanted last Friday night was some great wine, friendly discussion, and methods to help support United Policyholders. The underlying tension raised by Commissioner Lara’s speech made me drink a lot more of that great California wine.
Cheers!
Thought For The Day
“Wine is constant proof that God loves us and loves to see us happy.”
—Benjamin Franklin