Topline:
As the Trump administration's immigration crackdown stretches into its second year, researchers and health care workers say that it is creating a mental health crisis in immigrant communities.
Why it matters: Data from one primary care clinic in Los Angeles, shared exclusively with NPR, shows a sharp rise in anxiety, depression and suicidal thoughts among patients.
Why now: The therapists at Zocalo Health in L.A., who only see adults, have been busy supporting patients.
As the Trump administration's immigration crackdown stretches into its second year, researchers and healthcare workers say that it is creating a mental health crisis in immigrant communities.
Data from one primary care clinic in Los Angeles, shared exclusively with NPR, shows a sharp rise in anxiety, depression and suicidal thoughts among patients.
"When we look at our data during periods of intensified enforcement, our screening data showed a clear rise in distress," says Sophia Pages, a licensed marriage and family therapist and executive director of behavioral health at Zocalo Health, a primary care clinic in Los Angeles that mainly serves Latino families on Medicaid. "Immigration enforcement is functioning as a real-time public health stressor in the communities that we serve."
All patients at Zocalo get standardized screenings for mental health problems like anxiety and depression. Since the immigration enforcement agents began raiding farms and neighborhoods in the Los Angeles area in 2025, Pages and her colleagues have seen a sharp rise in symptoms.
"More than half of the patients we screened had anxiety that was severe enough to interfere with their daily life, and nearly three quarters were experiencing depression," says Pages.
And nearly 1 in 8 individuals struggled with thoughts of suicide, Zocalo found. That is more than double the rate of suicidal ideation in the general population.
"What seemed to sit underneath it for many patients was this profound sense of helplessness," Pages says, because no matter how careful they were, by changing their routines, or staying home more, they felt like they couldn't protect themselves or their families.
"And that loss of control was deeply destabilizing and can intensify depression, trauma-related distress and suicidal thinking."
Anyone considering suicide or in crisis can text or call 988 to reach the National Suicide and Crisis Lifeline. Press 2 to speak to a counselor in Spanish.
A significant number of patients have past traumas from incidents that happened in their home country and on their journey to the U.S.
One such patient is Esperanza, a 29-year-old mother of two boys who lives in King City, California.
Originally from Oaxaca, Mexico, Esperanza came to the United States in 2023 with her husband and her older son, who is now 11 years old. She asked NPR to use her first name only because she fears talking to the press could harm the process of seeking asylum for her and her family.
Back in Mexico, Esperanza's husband farmed a small plot of land they owned. He also made the spirit mezcal, she says.
Esperanza speaks Spanish in a phone interview with NPR, while her 9-month-old baby coos and babbles in the background. Luz Nieto, a community health worker at Zocalo, translated the conversation. (Zocalo relies on community health workers to connect individuals to care and continues to rely on them to cater to patients' needs even as families have gone into hiding with increasing immigration enforcement.)
Life in Oaxaca had been getting increasingly unsafe, Esperanza says, because a local cartel made them pay a fee to farm their own land and kept demanding that her husband do drug runs for them.
"When things started getting really bad, we grabbed our stuff and came to the border, the Mexico-US border," she says.
The journey itself was stressful, she says, as men who worked for the local cartel followed them until they reached the US border. The stress and trauma of it all left Esperanza struggling as they started to build a life in California. "I wasn't sleeping," says Esperanza. "I was having heart palpitations. I was just getting clammy all the time. And that was really affecting me as a woman, as a wife and as a mother."
When ICE, as US Immigration and Customs Enforcement is known, began conducting raids in and around Los Angeles last year, Esperanza's symptoms worsened. When she had to go to immigration court, she felt overwhelmed with fears of getting deported.
"What if they send me back? What if my kids stay and they just send me? What's going to happen to them?"
The same fears have plagued her 11-year-old son: "My son hears a lot of news from school, especially about immigration. He is scared of me going out alone without him because he says that maybe immigration will get me and he would be left behind on his own. And he says, 'Well, if they get both of us, then at least we'll be together."
Immigrant communities are already at risk of having higher rates of mental health symptoms in children, says Ariana Hoet, a pediatric psychologist at Nationwide Children's Hospital in Columbus, Ohio.
"Latino children often have higher rates of things like depression, anxiety," she says, because of all the stresses on families to adapt to a new culture, language and environment while still struggling with past traumas. Families also face discrimination, which can worsen mental health.
"All those things existed already, putting these communities at risk," explains Hoet. "Now we add a chronic stressor — this is what's happening with immigration."
The fear of kids getting separated from parents or other caregivers is a major source of stress for families. "If you're a mixed documentation family, most children are very aware of that and live in that fear of what can happen to my parents," says Hoet. "We know some parents have already been removed from the home."
A recent study in the New England Journal of Medicine concluded that the Trump administration's immigration crackdown has become a toxic stress for children that is likely to leave a lasting impact on their developmental, physical and mental health.
"Children who experience a parent's deportation, our research shows, that it's more than double the odds of developing PTSD," says Hoet, referring to Post-Traumatic Stress Disorder.
And the effects extend well beyond the kids directly affected. "Children in those communities are also at higher risk, and also report depression, anxiety and trauma-like symptoms."
That can manifest as physical symptoms, like belly aches, headaches, changes in their sleep and appetite, or it can show up in kids' behavior.
"You see kids become more clingy, very anxious and worried," says Hoet. "They can become quieter, withdrawn socially. They don't want to do things that they typically do."
Hoet says her partners at schools and local organizations tell her that they are seeing a rise in mental health and behavioral symptoms among children in immigrant communities since the ramping up of immigration enforcement.
In the Los Angeles area, the therapists at Zocalo Health, who only see adults, have been busy supporting patients like Esperanza.
"It has helped me a lot. It has helped me with my self-worth and just how I see myself, my situation," she says. "It's helped me with my panic attacks."
She has learned tools to calm herself when anxious — like breathing exercises, music, baking — and joined a local church, where she's finding community and strength.
"Right now I'm at least able to talk to other people and sometimes even venture into the street and walk," she says.
And she is passing on her new skills to her husband and son, so they, too, can cope better with their circumstances.
Copyright 2026 NPR
Topline:
A jury in California took less than two hours to decide that Elon Musk waited too long to file a lawsuit against his one-time business partner Sam Altman over the direction he's steered the artificial intelligence company OpenAI since the two had a falling out nearly a decade ago.
The verdict: In a unanimous decision, the nine-member advisory jury said Musk was beyond the statute of limitations when he launched his case in 2024. Judge Yvonne Gonzalez Rogers, of the U.S. District Court for the Northern District of California, agreed, tossing the case out. In determining that the suit was filed too late, the jury sidestepped questions at the heart of Musk's case accusing Altman and co-founder Greg Brockman of committing a "breach of charitable trust" by allegedly jettisoning OpenAI's founding mission, and then profiting from the decision — claims they disputed in court.
The backstory: OpenAI was established in 2015 as a nonprofit aiming to create advanced AI for the benefit of humanity — a mission born out of a shared concern among the founders about the potentially negative consequences of AI being controlled by any one person or for-profit company. But by 2017, the founders were convinced they needed to set up a for-profit arm of OpenAI to raise money and attract researchers in order to be competitive. Musk wanted control, but the others disagreed, and he left the board in 2018. In court, he claimed that Altman "stole a charity" by creating a for-profit entity that became, in his words, "the main thing" at OpenAI.
A jury in California took less than two hours to decide that Elon Musk waited too long to file a lawsuit against his one-time business partner Sam Altman over the direction he's steered the artificial intelligence company OpenAI since the two had a falling out nearly a decade ago.
In a unanimous decision, the nine-member advisory jury said Musk was beyond the statute of limitations when he launched his case in 2024. Judge Yvonne Gonzalez Rogers, of the U.S. District Court for the Northern District of California, agreed, tossing the case out.
"I've always said I would accept the jury's verdict," Gonzalez Rogers said after issuing her decision. "I think there's a substantial amount of evidence to support the jury's finding."
The decision brings a swift end to a three-week trial that laid bare the fears and ambitions that led two of Silicon Valley's biggest personalities to team up 11 years ago to launch OpenAI, the maker of ChatGPT, and then to part ways after a dispute over how to run it.
In determining that the suit was filed too late, the jury sidestepped questions at the heart of Musk's case accusing Altman and co-founder Greg Brockman of committing a "breach of charitable trust" by allegedly jettisoning OpenAI's founding mission, and then profiting from the decision — claims they disputed in court.
OpenAI was established in 2015 as a nonprofit aiming to create advanced AI for the benefit of humanity — a mission born out of a shared concern among the founders about the potentially negative consequences of AI being controlled by any one person or for-profit company.
But by 2017, the founders were convinced they needed to set up a for-profit arm of OpenAI to raise money and attract researchers in order to be competitive. Musk wanted control, but the others disagreed, and he left the board in 2018.
In court, he claimed that Altman "stole a charity" by creating a for-profit entity that became, in his words, "the main thing" at OpenAI.
Lawyers for OpenAI argued that Musk in fact supported the creation of a for-profit subsidiary with the goal of attracting big investments. They argued that, rather than being motivated by a commitment to OpenAI's original mission, Musk was unhappy that it did so well without him. A year and a half before suing, Musk launched xAI, a for-profit AI company, and OpenAI's lawyers said his lawsuit was an attempt to hurt a competitor.
Musk also sued Microsoft for aiding OpenAI through investments totaling $13 billion between 2019 and 2023. That claim was also dismissed.
Musk's lead lawyer had argued that Altman and his colleagues treated the nonprofit like a "shell" after the founding of the for-profit subsidiary in 2019, shifting employees and intellectual property into the for-profit.
After OpenAI made a $10 billion deal with Microsoft in 2023, Musk attorney Steven Molo argued last week in court, the company abandoned its commitment to open sourcing and safety, and instead "enriched investors and insiders."
In addition to helping found OpenAI, Musk was an early source of funds, providing $38 million over the course of several years to help get it off the ground. But Sarah Eddy, an attorney for OpenAI's defendants, argued in closing statements last week that that money came with no strings attached, meaning Musk "does not have a charitable trust to enforce."
Whether OpenAI breached a charitable trust or not, the jury's decision indicated that they believed that Musk took note of the actions that he claims were a breach of trust more than three years before filing his suit.
If the jury sided with Musk — and the judge agreed with them — OpenAI and Microsoft could have been forced to "disgorge" into OpenAI's nonprofit foundation up to $150 billion in damages. Musk also sought the dismissal of Altman and Brockman from their posts, as well as the dismantling of the for-profit entity.
The verdict interrupted a hearing on possible remedies. But at 10:23 am Pacific time, Edwin Cuenco, the designated courtroom deputy, handed Judge Gonzalez Rogers a note, after which she declared: "We have a verdict." The jury had started deliberations at 8:30 am.
Microsoft is a financial supporter of NPR.
Copyright 2026 NPR
Topline:
As World Cup fans look to L.A., one local team is breaking down barriers in youth soccer for girls.
The backstory: While searching for a girls’ soccer team in Boyle Heights for her stepdaughter, Eden Carriedo, 31, noticed opportunities were limited for young female athletes, so she created Barrio Futbol Academy.
Why it matters: Competitive soccer clubs can cost upwards of thousands of dollars a year, and that doesn’t include tournament fees and travel. But Barrio Futbol Academy focuses on affordability. The goal is simple: to remove financial barriers so more girls can play. But what started as a single team last spring has become something much bigger.
Read on... for more on this grassroots soccer program.
This story first appeared on The LA Local.
The sun is setting and lights are shining down on the Mendez High School soccer field in Boyle Heights. Balls are scattered across the large green turf as Barrio Futbol Academy players set up for practice. It’s the first of two try-outs of the spring and players are running drill after drill.
For young female athletes in the neighborhood, experiences like these have not been easy to come by.
While searching for a girls’ soccer team in Boyle Heights for her stepdaughter, Eden Carriedo, 31, noticed opportunities were limited for young female athletes, so she created Barrio Futbol Academy.
“There were very few girls’ teams to pick from,” Carriedo said. She went on to say that the ones that did exist were too expensive for many families.
Competitive soccer clubs can cost upwards of thousands of dollars a year, and that doesn’t include tournament fees and travel. But Barrio Futbol Academy focuses on affordability.
The goal is simple: to remove financial barriers so more girls can play. But what started as a single team last spring has become something much bigger.
“I was a single coach, but I expanded it to the formal nonprofit that it is now,” Carriedo said. In the early days, the club offered pickup games every other week at Ramon Garcia Park, but after growing into their first year as a competitive team, they continue to offer select free practice and futsal sessions, a type of indoor soccer that’s played on a smaller court.
For many players, the academy offers more than just a chance to compete. The young players of Barrio Futbol Club all carry aspirations and goals of their own.
“I hope to gain a lot more confidence,” said 13-year-old Camila Alonso.
Fellow teammate 12-year-old Leilanie Gomez hopes to build her skills. “Definitely to get better … like new tricks and things that I haven’t done before,” Gomez said.
More than just creating a team, the academy has built a strong sense of community, connection and belonging. At practices, players not only train but also form connections and build confidence together.
“My favorite thing about this team is that I always have my teammates, the parents, and the coaches that are always pushing me to be the best that I can be, even when I don’t feel like I’m doing my best,” Gomez said.
This sense of community is not only felt on the pitch but also on the sidelines.
“I feel like everybody gravitates to each other, because they know that it’s a team effort overall,” said Linda Rosas, 31, parent.
Parents of the athletes say that the program makes the families feel connected and supported.
“I absolutely love my Barrio family, the community, everybody, is just great. Everybody embraces everybody,” said parent Sandy Alcala.
Youth club soccer in the United States can cost families anywhere from about $1,472 to nearly $10,000, depending on the level of play. However, this range doesn’t include travel and gear expenses, which could potentially bring the total price to $20,000 annually per child, according to data reported by Girls Soccer Network. These high expenses often put competitive soccer out of reach for many families, highlighting the reality of the country’s pay-to-play system.
“I think that the mission of Barrio is to do everything we can to break down the pay-to-play system,” Carriedo said.
At Barrio Futbol Academy, this is demonstrated in how the program is run day to day. The club attempts to keep costs as low as possible by only asking families to cover what is necessary.
“When I say accessibility, I mean that we do not charge a dime more than what is necessary,” Carriendo said.
The program’s affordability has made a noticeable difference for families in the Eastside and Boyle Heights.
“I think it’s important that we keep providing that because it keeps girls out of trouble. It keeps them engaged, it keeps them going,” Alcala said. “And it keeps the parents motivated to want to keep bringing them, knowing that it’s not costing them an arm and a leg.”
The mission to provide affordable, competitive soccer has also received support from local businesses, including Picaresca Barra de Café and Purgatory Pizza, who both sponsor the Barrio team.
“Those two [businesses] I asked first because I was comfortable in those spaces, “ said Carriedo. “It’s important that the communities that sponsor this team are from the community.”
For many families, the impact of Barrio Futbol Academy goes far beyond just the game itself. The program is helping players build life skills that extend into their futures.
“I think that the clubs help the kids build confidence and build structure and build communication skills,” said parent Tesia Gomez.
Carriedo hopes those lessons stay with players long-term.
“I would love nothing more than for homegrown athletes out of Boyle Heights to maybe one day play in a World Cup,” she said. “But also be a female CEO that cites her time in sports.”
This story was produced under The LA Local’s Youth Journalism Program. To learn more or to get involved, click here.
Topline:
After more than 3,000 episodes of television stretched over 20 years and two TV networks, this critic believes Stephen Colbert's greatest legacy as a host and performer comes down to a single word. Truthiness.
Why now: And now, as his Late Show ends an 11-year run Thursday — canceled by CBS despite top ratings in a move some suspect was rooted in silencing a high-profile critic of President Donald Trump — it seems Colbert may have been felled by his stance against such thinking.
His backstory: Raised in South Carolina, Colbert learned the early basics of sketch comedy and satire at Second City in Chicago, serving as understudy for a guy named Steve Carell, who eventually joined him in the pair's first real break, serving as writers and performers for Saturday Night Live alum Dana Carvey's self-titled sketch comedy show in 1996.
Read on... for more on the upcoming final show.
After more than 3,000 episodes of television stretched over 20 years and two TV networks, this critic believes Stephen Colbert's greatest legacy as a host and performer comes down to a single word.
Truthiness.
Colbert highlighted it on the very first episode of his Colbert Report, a spinoff of The Daily Show which featured him as a blown-up parody of TV pundits like original Fox News Channel star Bill O'Reilly — championing the idea of believing something because it feels true, regardless of the facts. "I don't trust books," he says in a segment from that first show. "They're all facts and no heart."
And now, as his Late Show ends an 11-year run Thursday — canceled by CBS despite top ratings in a move some suspect was rooted in silencing a high-profile critic of President Trump — it seems Colbert may have been felled by his stance against such thinking.
"Stephen Colbert has shown, more so than anyone else of this modern era of late night, the power of sticking to the truth," says Roy Wood Jr., a former correspondent on The Daily Show and host of CNN's satire program, Have I Got News for You.
"It's pretty dope that he didn't blink," Wood adds. "In fact, he went harder. This is by far the most sensitive administration we've ever had to deal with as comedians. … He didn't bat an eye."
Hasan Minhaj, another Daily Show alum who hosted his own topical program for Netflix called Patriot Act, says Colbert showed how satirists could evolve while developing a relationship with their audience over decades — going from a top Daily Show correspondent to playing a character on the Colbert Report to revealing more of himself as host of the Late Show.
"What Stephen did, is he was constantly meeting the moment," Minhaj adds. "When you're hosting a nightly program, every day is a new moment. … I think Stephen will be known as one of the most brilliant minds to meet the moment in every way he possibly could."
Raised in South Carolina, Colbert learned the early basics of sketch comedy and satire at Second City in Chicago, serving as understudy for a guy named Steve Carell, who eventually joined him in the pair's first real break, serving as writers and performers for Saturday Night Live alum Dana Carvey's self-titled sketch comedy show in 1996.
But it wasn't until he landed with Carrell on The Daily Show a few years later that Colbert developed the persona he would later call a "high status idiot," who poked at the absurdity of cable news pundits — especially on the emerging, conservative-oriented Fox News Channel — by simply amplifying their behavior.
Minhaj says Colbert's work as a Daily Show correspondent was so successful, later contributors passed around an email from him outlining how to do the program's "field pieces" filmed outside the building.
"It really was almost like basketball fundamentals, but for performing political satire," he adds. "He is fully committed and in character the whole way through. … Stephen Colbert's field pieces became the cornerstone and benchmark for what a great correspondent performance is."
Working with longtime host Jon Stewart, who took over the Daily Show in 1999, Colbert, Carrell and the show's other correspondents honed a focus on news-driven satire and politics which spread across television, influencing a generation of programs and performers.
And the satire only expanded when he and Stewart spun off Colbert's character in a program airing after the Daily Show in 2005, called The Colbert Report — creating a figure so indelible, he testified in character before a Congressional subcommittee hearing on the issue of farm workers and immigration and roasted then-President George W. Bush during an iconic appearance at the White House Correspondents Dinner.
Former House Republican leader Tom DeLay even seemed to think Colbert was a real pundit, using footage from one of his interviews in a mass email to supporters.
"I always thought his maximum impact came in [The Colbert Report]," says Bill Carter, who covered TV for decades at The New York Times, creating books and a CNN docuseries on late night television. "That's when he was an entire original, like no one has ever seen, doing a character for nine years … He had to tell his guests, 'You know, I'm going to be a jerk.'… It was really a change in the form."
Carter wrote in an essay for CNN that Colbert's character was a "vain, narcissistic conservative true believer who was frequently given to spouting far-fringe ideas that politicians on the right might have been thinking in their gut, but were not willing, until Donald Trump, to speak out loud."
Besides testing the limits of satire, it was also a change which mirrored the times, as cable news pundits rose in prominence and power – especially on Fox News. "I think at the end of the day, he's always been trying to hold a mirror up to the country," Wood says. "Especially, you know, it started with Republicans."
David Letterman originally created CBS' The Late Show back in 1993, after he was passed over for the job of succeeding Johnny Carson as host of NBC's powerhouse Tonight Show. When Letterman retired from network television in 2015, Colbert was tapped as a successor, facing a serious challenge.
How to be himself on TV.
"One of [Colbert's] lasting impacts, was his ability to be an absolute brilliant master of both satire and sincerity," Minhaj says.
But being himself on camera didn't come immediately to Colbert, who admitted recently to the New York Times that he initially avoided being overtly topical, newsy or political in The Late Show's early days.
By the time I visited his program at the end of 2016, it had been energized by live shows during the Republican and Democratic conventions and the hiring of Chris Licht — who would go on to an ill-fated tenure as president of CNN — to handle non-comedy production decisions as showrunner.
"He didn't have time to find his voice before I got here," Licht told me back then. "[Colbert] really was running the show and every element of it."
Colbert's turn toward revealing more of himself personally on the show mirrored a turn in media generally toward voices which seem more authentic, especially on podcasts and cable TV. Beyond his criticism of Trump and MAGA Republicans, Colbert showed his love for his longtime wife, Evie McGee Colbert, his passion for The Lord of the Rings and his strong connection to Catholicism on The Late Show.
And while some critics have theorized that part of the slide in ratings among network TV late night shows might be attributed to the hosts' increasingly intense political stands, Carter disagrees. He says modern media consumers often operate in an information silo where online algorithms push content at them, which reinforces what they already believe – making it tough for anyone to craft comedy which speaks across a wide swath of consumers.
Unlike late night legend Johnny Carson, Carter says this era's late night hosts have a hard time appealing to an audience across political lines. "Everybody has to take a point of view," he says. "You're forced into it. You're asked to stand up and say something now. I think, clearly, the events of the world demand that."
Wood agreed, noting that the best satire pokes at those in power in a way that speaks to the concerns of average viewers. "It's an unspoken pledge that you take as a performer to honor the truth of what's out there," he adds.
"People who believe these late night show are anti-Trump have not stopped to ask themselves, 'Is this administration completely perfect?'" Wood says. "Should we not point out its imperfections? If pointing out its imperfections makes you run for the hills and change the channel, so be it. It doesn't change what's happening on the ground."
As Colbert's final Late Show episode approaches, the question arises of what he might do next. Already he has announced a project close to his heart — writing a new Lord of the Rings movie with his son — while insisting he doesn't yet have the mental energy to seriously consider what his next chapter might be.
But Minhaj and Carter both have the same suggestion for his next project: A one-man show on Broadway, perhaps featuring the return of his old Colbert Report character.
"I'm talking this kind of Billy Crystal meets Steve Martin meets Martin Short meets John Leguizamo personal storytelling," Minhaj adds. "Song, dance, he can do it all … improvise, do comedy and be deep and sincere. He's an electric live-wire act."
While cancellation of The Late Show — and CBS' decision to lease the time period to mogul Byron Allen for his often not-topical program Comics Unleashed — may look like the beginning of the end for late night television, Carter expects Colbert's departure to boost others, particularly Jimmy Kimmel's show.
"I wouldn't be surprised if 30% to half of [Colbert's] viewers go over to Kimmel," says Carter, who has noticed Kimmel gets an uptick in viewers whenever he has a new episode while Colbert is in reruns. (This week, Kimmel and Tonight Show host Jimmy Fallon return the favor, airing reruns on Thursday to reduce competition with Colbert's swan song.)
With any luck, Colbert, who turned 62 last week, will find a way to evolve his style yet again to meet the newest form of satire and television. At a time when the world seems more absurd than ever, the need has only grown for a deftly incisive voice with the courage to decry truthiness to power, regardless of consequences.
Copyright 2026 NPR
Topline:
From a public wildfire authority to a state backstop, California insurance regulator candidates propose greater state involvement.
Why it matters: Their proposals run the gamut: Create a public insurer and do away with private insurers altogether. Implement a state-run natural disaster insurance system that would complement the private market. Provide a state backstop for insurance for insurance companies, also known as reinsurance. Form public-private partnerships that would theoretically give insurers confidence to keep doing business in California.
The backstory: In April, the California Earthquake Authority released a report analyzing different levels of state involvement in catastrophic risk. One option: a state backstop that would provide reinsurance for catastrophe, which Sen. Ben Allen said could “help to absorb wildfire loss… an analogy, I suppose, is the (Federal Deposit Insurance Corporation) — they stabilize the banking system when it’s under major stress.”
Read on... for more on the proposals.
A few of the candidates vying to be California’s next insurance commissioner want to address the insurance crisis by having the state take a bigger financial role.
Some of the problems they’re trying to solve include:
Their proposals run the gamut: Create a public insurer and do away with private insurers altogether. Implement a state-run natural disaster insurance system that would complement the private market. Provide a state backstop for insurance for insurance companies, also known as reinsurance. Form public-private partnerships that would theoretically give insurers confidence to keep doing business in California.
More state involvement might help, said David Russell, a professor of insurance and finance at Cal State Northridge who co-authored a report for the National Association of Insurance Commissioners published last December. The report recommends creating a public-private partnership called the California Wildfire Authority, which would leave most coverage to private insurers and shift coverage of major wildfires to the state, including by providing additional reinsurance.
“It’s an amalgamation of compromises,” Russell told CalMatters. “The government will end up bailing people out anyway. Why not plan it in advance? Give everybody the playbook now and fund it properly.”
The idea sounds a little bit like what commissioner candidate Jane Kim, a Democrat, is proposing: a state-run authority for wildfire and flood funded by a portion of policyholders’ premiums.
Similarly, Republican candidate Merrit Farren has proposed a state-run reinsurance authority funded by a fee insurers charged their customers. Kim and State Sen. Ben Allen, a Democrat, have told CalMatters they are also interested in state reinsurance but have not included it in their platforms like Farren. Steven Bradford, a former Democratic state lawmaker, wants to explore a public-private partnership that he said could help insurance companies with liquidity.
In April, the California Earthquake Authority released a report analyzing different levels of state involvement in catastrophic risk. One option: a state backstop that would provide reinsurance for catastrophe, which Allen said could “help to absorb wildfire loss… an analogy, I suppose, is the (Federal Deposit Insurance Corporation) — they stabilize the banking system when it’s under major stress.”
The earthquake authority itself may offer some clues for California moving forward.
Created by the Legislature in 1996 after insurers retreated from California in the wake of the 1994 Northridge quake, the authority is a public-private partnership that critics say does not cover enough of the residential market. Moreover, the critics continue, the authority’s approximately $20 billion in claims-paying capacity is inadequate.
“It was a terrible deal,” said Jamie Court, president of consumer advocacy group Consumer Watchdog. He said coverage through the authority is thin, deductibles are high and premiums are expensive. Court said that because quake insurance was carved out of homeowners insurance, the premiums policyholders have paid over the past three decades have mostly gone to reinsurance and bureaucracy as opposed to building up enough reserves.
On the other hand, Russell said, the authority has yet to be tested by a major earthquake, and “what (its creation) shows is that in California, we can do this because we’ve done it before.”
Some insurance industry representatives questioned why the commissioner candidates think California would want to take on financial risk now largely borne by the FAIR Plan, which is required by law to offer policies to property owners who can’t get them from private insurers and is run by an industry alliance.
“It’s easy for people to propose solutions for government involvement that no one wants to fund down the road with taxpayer dollars,” said Rex Frazier, president of the Personal Insurance Federation of California. “We’re not asking for that, by the way.”
But Farren said he developed his plan with the help of the insurance industry, including executives at Acrisure, a big insurance broker and financial services company based in Grand Rapids, Mich. If disaster strikes and funds in the proposed state reinsurance authority are insufficient to pay claims, it could raise funds by issuing bonds, which would have the same status as municipal bonds, Farren said. His idea was inspired by public reinsurance programs in Florida for hurricanes, the United Kingdom for floods and the U.S. federal government for terrorism risk.
A couple of consumer advocacy groups are more receptive to the reinsurance concept. Court said it might be a good idea if the state or U.S. government provided some sort of backstop for insurance companies. (U.S. Sen. Adam Schiff, the Democrat from California, has proposed federal legislation to establish a federal reinsurance fund for insurance companies, which the insurance industry opposes.) Amy Bach, executive director of United Policyholders, told the state Senate Insurance Committee this week that she was in favor of “some kind of a backstop like Florida's hurricane catastrophe fund.” Bach told CalMatters later that she thinks the state helping “take a bite” out of what’s driving higher premiums could help.
Florida is different from California, though, said Carolyn Kousky, an economist who studies climate risk and disaster finance. Kousky said that Florida’s insurance market is dominated by small players that need help with reinsurance, while “big national players are still writing quite a bit in (California).” Those national companies are diversifying their risk and can buy reinsurance based on their national portfolio, so those insurers have less need for a state backstop, she said. She questioned whether establishing a state reinsurer would make a significant difference in consumers’ insurance premium rates.
Kim said critics of her proposal to create a public disaster insurance fund that would split off wildfire and flood coverage from homeowners insurance — inspired by New Zealand’s program — ignore that California’s “current system doesn’t work, it’s too expensive and doesn’t cover enough.” She pointed to Los Angeles fire victims who have found that they are underinsured and don’t have enough coverage to rebuild their homes. She has not provided specific numbers for how much capitalization her proposed system would need; it’s something that would need to be studied, she said. She envisions that her plan would create a revenue stream that the state could invest into reducing fire risk.
“At least some of our dollars will be stewarded by the public,” Kim said.
Another candidate, Lalo Vargas of the socialist Peace & Freedom Party, wants to go further: He is calling for investigating the 10 largest insurance companies in California and eventually replacing them with a public insurer run by the state.
“Insurance works better when everyone is in the same pot,” Vargas said. That pot, he said, could be filled by taxing utilities and fossil fuel companies, “so billionaires could pay for the costs associated with the climate crisis.”
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.