What to know as California chooses its next insurance watchdog amid wildfire crisis

Californians finish voting Tuesday for who they think can best tackle one of the toughest jobs in the state: insurance commissioner.

The commissioner is responsible for regulating the nation’s largest property insurance market that includes home and auto, plus health, pet, ride-hailing and life insurance, as well as workers’ compensation.

But the hot topic in the past few years as wildfire risk has increased has been home and fire insurance. The next commissioner will face many challenges that include trying to balance property insurance availability with affordability. Some insurance companies that had stopped renewing policies or writing new ones in the past few years are now taking advantage of new regulations that allow them to use new tools in setting their rates. This generally means premiums will rise as the Insurance Department, headed by the commissioner, is likely to keep approving increases in homeowners’ insurance premiums.

The new commissioner will also have to deal with the aftermath of last year’s Los Angeles County fires. Insurance-claim delays and denials are a key part of the slow pace of rebuilding and recovery. State Farm, California’s largest individual insurer, and the FAIR Plan, the state-mandated fire insurance provider of last resort, are both facing lawsuits from homeowners and legal action from the insurance department over their handling of claims from those fires.

The leading Democratic candidates are state Sen. Ben Allen, who will be termed out of the Legislature; Jane Kim, head of the California Working Families Party who served on the San Francisco Board of Supervisors; Patrick Wolff, a financial analyst who has never held public office; and Steven Bradford, the former state senator and assemblymember. Neither of the leading Republican candidates has held statewide public office, either: Stacy Korsgaden, a longtime insurance agent, and Merritt Farren, an attorney who lost his home in the Palisades fire last year.

The candidates CalMatters interviewed mostly agreed on the problems that need to be tackled but proposed different solutions. A few of them have called for increased financial involvement by the state: Kim wants to establish a state authority for wildfires and floods funded by a portion of policyholders’ premiums. Farren wants to create a state reinsurance authority funded by a fee insurers charge their policyholders, something both Kim and Allen have expressed interest in. Bradford said he would study a public-private partnership to help keep insurers writing policies in California.

Consumer advocacy groups and former insurance commissioners say the job is complicated and involves a “brutal balancing act” that takes into account the needs of homeowners, business owners, landlords and renters while keeping insurance companies confident that the rates they’re charging match the growing risk of wildfires in the state.

U.S. Rep. John Garamendi, the Democratic congressman whose district includes much of Contra Costa and Solano counties, was the state’s first insurance commissioner and held the position two different times. He told CalMatters that the commissioner job is “complex, hard, detailed work.”

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.