By Julie Johnson & Joe Garofoli, SAN FRANCISCO CHRONICLE
State Sen. Bill Dodd, whose North Bay district is on the front lines of the state’s wildfire crisis, said talks fell apart after weeks of work by a small contingent of politicians and other stakeholders. Their mission, he said, was to prevent more companies from fleeing the state by striking an agreement that would have allowed insurers to increase rates as long as they guaranteed to cover a certain percentage of properties in areas where the risk of wildfires are high.
But an agreement proved impossible before Monday, the deadline for legislators to submit legislation this year, despite increasing reports Californians are unable to secure quality coverage.
Several top insurance companies — including Farmers, State Farm and Allstate — have reduced their footprint in California over the last several months. State Farm and Allstate say they’re not writing any new homeowner insurance policies in California moving forward, arguing it’s too expensive to do business here. Last week, United Services Automobile Association Group said it would reduce future coverage in California.
As it stands, property owners are losing their policies, or unable to acquire new ones, in concerning numbers and are instead forced to purchase the state-offered Fair Access to Insurance Requirements Plan, a temporary insurer of last resort that’s becoming a permanent option for many Californians. The FAIR plan is generally more expensive and provides less coverage.
Legislators, insurers and Insurance Commissioner Ricardo Lara had been trying to stave off concerns of an insurance crisis in California — a state that boasts the strongest insurance protections for consumers in the country — in confidential, closed-door talks.
Their efforts came to light last week when a secret recording surfaced, in which insurance industry lobbyist Michael Gunning bragged about “trying to jam a bill in the last three weeks” of the legislative session. Gunning later told Politico his comments were taken out of context and that he was describing an overall flurry to get legislation passed by the deadline.
But the recording escalated fears from consumer advocates that a bill rushed through at the last minute, with little time for oversight, would favor the insurance industry over regular Californians.
“Deals hatched in the darkness often aren’t good deals,” Jamie Court, president of Consumer Watchdog, told the Chronicle Thursday. “None of the consumer groups were at the table.”
But Dodd said he and his Senate colleagues were ready to support it. All Californians would have ended up paying more for property insurance, he said, but in exchange, more people would have access to quality insurance plans, even in fire-prone areas. Insurance companies would have been required to cover a certain percentage of properties in fire-prone areas, he said.
“The legislative agreement I was prepared to support would have set a pathway forward to create a stable market for insurance in California,” Dodd said.
Assemblymember Jim Wood, D-Healdsburg, who sits on the Assembly’s committee on insurance, did not respond to repeated requests for comment on the negotiations. Nor did incoming state Senate Leader Mike McGuire, D-Geyserville.
McGuire’s silence is particularly striking. Not only is he about to lead the state Senate, he has filed to run for state insurance commissioner in 2026, when Lara will be termed out.
To pass a measure this year, lawmakers would have had to bypass the normally monthslong legislative process and speed a deal through in two weeks. The final day for lawmakers to submit new bills this year is Monday at midnight, with final votes cast by Sept. 14.
Consumer groups celebrated the deal’s collapse.
“They should have done it in the light of day with the regular legislative process where everyone can comment,” Court said.
A circulated draft included controversial new policies, Court said. One was a universal surcharge to help insurance companies shift FAIR plan costs to consumers. Another involved insurance plans for insurance companies, and shifting those costs to consumers, as well, “which is illegal in California right now,” Court said.
Dodd said he hopes Lara takes a stronger stance promoting new policies going forward. Insurers have been complaining that their applications to Lara’s office for rate adjustments have taken “an inordinate amount of time,” Dodd said. Although he had no data backing up those claims, Dodd said he felt Lara’s office could be more effective at handling the insurer applications given how recent catastrophic wildfires have changed the insurance space in California.
“That’s within his power,” Dodd said.
Lara’s office didn’t immediately respond to a request for comment Thursday.
Lara, who was first elected in 2018, accepted more than $270,000 in campaign contributions from 56 people with ties to the industry after pledging not to take donations from the people he was going to regulate.
Lara recently appeared to be leaning toward a deal with insurers that would offer consumers more opportunity to buy insurance — even if it raised costs.
“The ideal here is to give availability of insurance to every Californian, so then the costs come down when insurance companies are back fighting for your business,” Lara said on the podcast hosted by state Sen. Steve Glazer, D-Orinda, two weeks ago.
Lara said consumers have told him that they are more willing to buy insurance on the open market than use the FAIR plan.
Lara told Glazer that consumers around the state have told him that they are “willing to pay for coverage that is comprehensive as opposed to the FAIR Plan, which is much more expensive, limited in scope and coverage and leaves consumers very vulnerable.”
“Yes, affordability is critical. But right now, availability is more important. We want insurance companies to increase their market share given the ongoing risk that we live in every day,” Lara said.
Court said he felt optimistic that genuine debates about insurance policies could happen next session when the Legislature is under new leadership, including McGuire and incoming Assembly Speaker Robert Rivas.
“I’m hoping new leadership will create a new atmosphere,” he said. “When insurance companies are controlling the debate, we’ll have bad ideas that fail.”