State senator and businessman run for state insurance commissioner post in wildfire aftermath

The race for California insurance commissioner this year has taken on greater importance for North Bay residents, after many have found themselves with homes underinsured as a result of last year's wildfires.

And reforms to overhaul homeowner insurance regulations to provide more ways to help fire victims were mostly thwarted in the Legislature this year as a result of strong insurance industry lobbying.

The two candidates for the post as the state's insurance chief have pledged to hold the industry accountable, though they have different backgrounds and styles.

State Sen. Ricardo Lara, D-Bell Gardens, touts his working-class roots and pro-consumer bonafides, since he sponsored the first major attempt at a Medicare-for-all health insurance program in the state. He also was a strong ally of local officials such as Sens. Mike McGuire, D-Healdsburg, and Bill Dodd, D-Napa, as they pushed insurers earlier this year for more recovery relief to policyholders whose homes were destroyed during the historic 2017 fires.

Steve Poizner is a former technology executive from the Silicon Valley who already worked as state insurance commissioner from 2007 to 2011 as a Republican. He is now running to be elected as an independent in a campaign that stresses his previous experience in the job, as well as his goal to focus on preventive measures for homeowners that would reduce the destruction caused by wildfires.

The incumbent, Dave Jones, is leaving office after eight years. He chose not to run for re-election and pursued an unsuccessful bid earlier this year for state attorney general. Jones has thrown his support to Lara, a fellow Democrat.

Nation's largest market

The next person elected to the key position will oversee the $310 billion California insurance market, the largest in the country and the fifth-largest in the world. The state department among other things also monitors the licensing of agents and brokers; checks on insurers' solvency; prosecutes insurance fraud; and helps to resolve consumer complaints, including through mediation. In addition, Proposition 103 provides the department the authority to approve or reject property-and-casualty insurance rate increases on such policies as automobile and homeowner insurance policies.

In his role, Jones used his office as a bully pulpit to press for a legislative package that would inject more pro-consumer measures into the home insurance market in the aftermath of the wildfires.

Locally, state regulation of the home insurance industry became a hot topic as a result of the fires that destroyed 5,334 homes a year ago in Sonoma County. The prevalence of underinsurance - with some homeowners underinsured by hundreds of thouands of dollars to build new houses to replace ones burned - has been cited as one of the main reasons for the slow pace of rebuilding. By the one-year anniversary of the fires last month, only about 50 homes were rebuilt in the county.

One troubling statistic: 66 percent of local fire victims have reported they would be underinsured in trying to rebuild houses, according to a survey released last month by United Policyholders, a San Francisco-based nonprofit consumer advocacy group. More than 500 local fire victims participated in the survey.

The same survey also found 53 percent of fire victims still have not settled with their insurers on full reimbursements for fire-damaged properties.

“The California home insurance market needs to be very carefully regulated in the coming years to preserve competition/consumer choices and quality coverage,” said Amy Bach, executive director of United Policyholders, in an email. “Heavy handed/beat up the insurers (rhetoric) is not going to work, nor is looking the other way - so whichever one of these two candidates wins, they will need to take a sophisticated approach.”

Lara's strategy

Lara said he can carry on Jones' effort, noting passage of his bill that prevents insurance companies from canceling all homeowner policies for one year within a declared emergency area and surrounding ZIP codes, expanding such protections to those whose homes withstand the natural disaster. Previously, state law only protected homeowners who lost their houses.

The legislation also required insurers to report detailed wildfire risk data to the state insurance department. The bill was prompted by growing fears that home insurers eventually will drop many North Bay homeowner policies, given the greater risks for more wildfires in the region.

“We're keeping the industry honest,” Lara said in an interview. “I think Dave Jones has done an excellent job and I want to bring even more transparency within the industry.”

While realizing the strength of the insurance lobby, Lara said he would push to get lawmakers out of Sacramento and into the field to see firsthand the fire damage and aftermath.

That was done with the joint hearing of the Senate and Assembly Insurance committees that was held Oct. 30 in Napa. Such encounters can help persuade on-the-fence lawmakers, he said.

“We are having families being pitted against the big insurance companies,” Lara said.

Poizner's strategy

In an interview with The Press Democrat editorial board, Poizner said he took tough stands against the industry while he served as insurance commissioner. He chose not to use strident public rhetoric about the insurance industry, preferring to use his influence behind the scenes.

“You don't want an insurance commissioner for political sport to bash on insurance companies on a regular basis, whether they deserve it or not,” he said.

For example, during Poizner's tenure he instituted a set of voluntary standards for insurers to adopt in the aftermath of San Diego-area wildfires, which Jones also used in the North Bay fires.

They included immediately providing at least 25 percent of personal property coverage without damage itemization for fire victims. Poizner also issued a rule before he left office that detailed how insurers were required to disclose to policyholders their full home replacement cost coverage provisions in policies, how they would be calculated and communicated. The industry sued the department, but the state Supreme Court upheld the rule last year.

In this campaign, Poizner is stressing the importance of risk- mitigation techniques that homeowners could use on greater scale and position themselves for discounts on their homeowner insurance premiums.

These would include replacing attic vents in homes that do not keep out floating embers, which can then enter homes and cause a blaze from the inside.

“It's not just about cutting down trees. It's the need for putting the right kind of venting in your house,” he said. “I want to work with insurance companies to put these financial incentives in place.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.