Despite Missteps and Open Investigation, State Insurance Chief Appears Headed To Re-Election

Ricardo Lara’s first term was marked by violations of key campaign pledge, other allegations


October 9, 2022

Months into his first term as one of just eight people elected to statewide office in California, Ricardo Lara was in trouble. 

The state insurance commissioner was caught breaking his promise to avoid taking campaign donations from people he regulated, and he was struggling to explain what happened to voters. 

Lara called the contributions a mistake and said they were collected in error. He returned some $80,000 his campaign accepted from insurers and even thanked The San Diego Union-Tribune for bringing the matter to his attention.

But the political crisis deepened throughout 2019, as additional reporting by the Union-Tribune and other news organizations delved deeper into his record.

Subsequent articles showed that Lara’s office intervened in disputes pending before his agency and changes were made that appeared to benefit contributors. He accepted more donations from people with business before the commission than he previously acknowledged and he billed taxpayers for his rental house in Sacramento.

A former state senator from the Los Angeles area community of Bell Gardens, Lara also met confidentially with an insurance executive who needed commission approval for a planned acquisition. He later said he would recuse himself from any decisions related to the company executive. 

Lara also told a group of auto insurers that he supported a controversial plan to provide them access to drivers’ vehicle data, one of the industry’s key objectives.

“I’m prepared to get creative just like all of you have been for so many years,” the news website Politico quoted Lara from a private speech. 

The wave of negative press reports sparked a series of newspaper editorials criticizing the freshman regulator. It also spawned a serious re-election challenge during the June primary.

But Lara emerged from the spring campaign as the top vote-getter even though he is the subject of an open investigation by state elections regulators, who are examining a series of political donations from insurers to groups that support Lara’s re-election.

Lara appears well-positioned to be returned to office for a second four-year term in the general election next month. The incumbent Democrat faces Republican Robert Howell on the Nov. 8 ballot.

State Assemblyman Marc Levine, D-San Rafael, narrowly missed qualifying for the November runoff, finishing third and fewer than 5,000 votes behind Howell among the nine candidates.

The outcome of the June primary election allowed Lara to avoid an intra-party fight for the seat, which regulates more than $300 billion in insurance policies sold in California every year.

The Lara campaign said the primary ballot result showed that Californians approve of the job the state’s elected insurance regulator has been doing since he won the election in 2018. 

“Voters rejected the baseless attacks and personal mudslinging, and instead focused on the commissioner’s record of success in helping California consumers and wildfire survivors,” Lara campaign official Robin Swanson said in an email.

Under Lara’s stewardship, the California Department of Insurance has taken credit for improving consumer protections, cracking down on workers’ compensation insurance fraud and reducing automobile insurance premiums for drivers during the pandemic.

“As wildfires continue to threaten our state, this one year of protection will give these hard-hit communities time and added incentive to protect their homes from future wildfire disasters,” Lara said last month in announcing a temporary moratorium on homeowner policy cancellations for wildfire victims.

“My department and I will be there from day one of recovery until the job is done and communities are safer,” he said.

Political experts say the generally low-profile nature of the elected state insurance commissioner’s seat will likely work to Lara’s benefit. So, too, will the amount of time that has passed since the political-donations issue hit the papers.

Robert Shrum, a political science professor and director of the Center for Political Future at the University of Southern California, said Lara will benefit simply by having the letter “D” after his name. 

“This is a Democratic state,” Shrum said. “It’s not a high-visibility race, so there won’t be a lot of information out there. He will almost certainly win.

“People don’t know about those issues” from 2019, he added. “I could be wrong, and maybe in the end I will be. But if you were betting, you would have to bet that all of that (prior attention) wouldn’t make a difference.”

One leftover issue from the negative stories that emerged during the first year of Lara’s tenure as the state’s senior insurance regulator is an ongoing lawsuit over his agency’s handling of California Public Records Act requests.

The Los Angeles advocacy group Consumer Watchdog sued both Lara and the Department of Insurance in 2020, alleging that he and his agency failed to comply with state open-records laws.

The nonprofit, which is largely responsible for the winning 1988 state ballot measure that created the elected insurance commissioner position, also accused Lara of wrongly withholding certain records and creating other documents to release instead.

“Consumer Watchdog has been informed by whistleblowers that the Department of Insurance created a new version of the original calendar entries to avoid disclosing certain meetings and meeting ‘notes’ containing details of Lara’s interactions with insurance company officials,” the organization said at the time.

The Department of Insurance said it has consistently complied with the California Public Records Act and looks forward to the legal dispute being resolved in court.

“Transparency and public access to records are core values of the Department of Insurance,” spokesperson Michael Soller said in an email. “We apply that to all areas, from our review of insurance company rate filings to our handling of public records.

“We will continue to respond to each and every records request in compliance with the law and our core values of transparency and public access,” he said.

Jamie Court, the Consumer Watchdog president who has been a sharp critic of Lara’s since he assumed statewide office, said he remains disappointed in the commissioner’s handling of the powerful regulatory agency.

“His first term was marked by an abdication of his responsibility to represent the consumers in an unbiased fashion and to be transparent about his dealings with the industry,” Court said.

“We can only hope he learned his lesson and has to work twice as hard to earn the public’s trust back by being an aggressive and transparent regulator,” he added.

Lara is also under investigation by the state Fair Political Practices Commission for potentially violating campaign rules.

According to a complaint filed earlier this year by Consumer Watchdog, a political fund the insurance commissioner serves as an ex-officio member accepted $122,500 from seven different insurance companies between June 2021 and this past April.

In May, the LGBTQ Caucus Leadership Fund gave $50,000 to Californians Supporting Ricardo Lara for Insurance Commissioner 2022, an independent expenditure committee that supports Lara’s re-election.

The LGBTQ Caucus Leadership Fund also donated $75,000 to the Equity California political action committee, which made two contributions totaling the same amount to the independent expenditure committee working to re-elect Lara, records show.

“The fact that Equity CA and the LGBTQ Caucus committee moved the exact amount of the insurance industry contributions to the Lara IE committee on the exact same day cannot be a coincidence,” the complaint stated.

The insurance commissioner and his staff did not respond to questions about the probe when the Union-Tribune disclosed the investigation this spring.

A spokesperson for the Fair Political Practices Commission said the Lara case is “open and pending.”

Meanwhile, the public-records dispute is scheduled to come to a head at a hearing later this month.

Lawyers for Lara and Consumer Watchdog are scheduled to appear Oct. 21 before a Los Angeles Superior Court judge to argue their positions on the nonprofit’s request for documents.

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