Ricardo Lara’s Troubles Aside, Reverting To An Appointed Insurance Commissioner Would Hurt Consumers

Published on

Where the troubling trail of accusations dogging Insurance Commissioner Ricardo Lara will lead is hard to tell. State records show that insurance industry executives and their relatives gave tens of thousands of dollars to Lara’s campaign committee–even as he intervened on their behalf in cases before his agency. 

We’ll know more on Aug. 31. That’s when Lara has promised to make public his communications and calendars of meetings with the executives.

Whatever happens then, one principle is clear: the public’s ability to hold the Insurance Commissioner accountable at the ballot box—a reform adopted by California voters in 1988 by an initiative I wrote—remains their best protection against a wayward regulator.

We learned that lesson the hard way. When insurance commissioners were appointed by governors, skyrocketing insurance premiums for auto, home and even medical malpractice coverage routinely destabilized the economy.   

In the 1980s, the Legislature required Californians to buy auto insurance, and young African American and Latino men were charged thousands of dollars for coverage that they could not afford.  

Then Gov. George Deukmejian and his appointed commissioner stood by and did nothing while the insurance companies feasted on our flesh, immune from regulation, civil rights and antitrust lawsuits or any other form of accountability for their behavior.

 In 1988, voters took matters into their own hands and enacted a series of powerful consumer protections against excessive insurance rates and abusive practices. To force the insurance companies to obey these unprecedented reforms, the initiative made the insurance commissioner an elected position, providing aspiring politicians a powerful incentive to enforce the laws, and, if they did that job well, a platform for higher office. 

Mandating political accountability worked. Under elected insurance commissioners, California’s auto insurance rates have actually dropped over the last 30 years. By contrast, states across America saw liability premiums rise by an average of 58%. 

The Consumer Federation of America reported in 2018 that California drivers alone have saved $150 billion on their auto insurance bills since 1989. Only 11 states have appointed insurance commissioners.

The first elected Insurance Commissioner, Congressman John Garamendi, established a tradition: He vowed never to take money from the companies he regulated. Only two insurance commissioners have violated this unwritten rule. 

Twenty years ago, Chuck Quackenbush created an off the books slush fund with insurance company money, in exchange for favorable treatment for companies accused of stiffing policyholders on Northridge earthquake claims. 

Facing impeachment and possible prosecution, Quackenbush resigned in 2000. Once described as a promising candidate for statewide office, Quackenbush moved to Florida where he became a police officer.

Unlike Quackenbush, who made his public hostility to 103’s reforms a fundraising tool, newly elected Insurance Commissioner Lara has presented himself as a progressive with a pro-consumer agenda.

That makes all the more jarring his comments during a closed-door conference with insurance industry lawyers and lobbyists last month: he criticized Proposition 103’s protections and said he was ready to “get creative, just like all of you have been for so many years.”

Allegations that Lara used his office to reward donors raise serious legal questions that he will have to answer completely and quickly. Pandering to a bunch of industry executives at a luncheon isn’t unlawful but it is troubling.

Either way, Commissioner Lara knows the punishment for protecting insurance companies at the expense of consumers: exile from public life.

Some pundits argue that Lara’s conduct is the fault of the voters for politicizing the office. But going back to the system in which the insurance commissioner is appointed would only please the powerful insurance lobby, and it would disenfranchise Californians of one of their most successful powers: the ability to elect the person who protects their checkbooks. 

Harvey Rosenfield
Harvey Rosenfield
As Consumer Watchdog's founder, Harvey Rosenfield is one of the nation's foremost consumer advocates. Trained as a public interest lawyer, Rosenfield authored Proposition 103 and organized the campaign that led to its passage by California voters in 1988 despite over $80 million spent in opposition (still a record).

Latest Insurance Videos

Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: Using Models To Predict Insurance Rate Hikes
02:52
Video thumbnail
KXTV-SAC (ABC) - Sacramento, CA: Proposed Insurance Changes
02:31
Video thumbnail
KBCW 44 Cable 12 - San Francisco, CA: Chevy Camaro Thefts On The Rise
02:37
Video thumbnail
ABC7 - What's California doing to address the insurance crisis?
03:09
Video thumbnail
Intervenor Report Press Conference
26:34
Video thumbnail
Consumer Alert — Insurance Attack
02:05
Video thumbnail
Spectrum News 1 (San Fernando Valley) - Los Angeles, CA: Insurance Revenue: What You Need To Know
03:46
Video thumbnail
KFMB-SD (CBS) - San Diego, CA: Insurance Rates Spiking Across The County
04:21
Video thumbnail
KTVU (FOX) - San Francisco, CA: State Farm Has Been Granted An Average Of 20% Increase In Rate Hikes
02:39
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: State Farm Home Insurance Rate Hike
01:57
Video thumbnail
Tough Qs lawmakers should be asking about Commissioner Lara’s deal with insurers
07:43
Video thumbnail
KOVR-SAC (CBS) - Sacramento, CA: Car Insurance Cost Rising
02:25
Video thumbnail
Will California protect homeowners from insurance company blackmail?
02:17
Video thumbnail
Spectrum News 1 (San Fernando Valley) - Los Angeles, CA: Fire Insurance Affordability
03:52
Video thumbnail
KGO(ABC)-San Francisco, CA: Consumer Watchdog and the Insurance Commissioner's Office Are In A Brawl
03:12
Video thumbnail
KNBC-LA (NBC) - Los Angeles, CAL: CA To Consider New Rules For Property Insurance Pricing
01:49
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: Insurance Overhaul
03:06
Video thumbnail
NBC Nightly News: Climate Change Driving Up Home Insurance
01:55
Video thumbnail
KCAL-LA - Los Angeles, CA: Insurance for High Risk Areas
03:02
Video thumbnail
KTLA-LA (CW) - Los Angeles, CA: Insurance Companies Offering Coverage In CA Fire Zones Again
00:48
Video thumbnail
KXTV-SAC (ABC) - Sacramento, CA: Changes Coming to Home Insurance Market
02:33
Video thumbnail
KCBS-LA (CBS) - Los Angeles, CA: CA Insurance Pricing Proposal
02:08
Video thumbnail
KCRA3 - Sacramento, CA: California Lawmakers to Hold Hearings on Homeowners Insurance Crisis
02:28
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: California Home Insurance Crisis
05:24
Video thumbnail
KMPH(FOX) - Fresno, CA: Insurance Industry's Focus Will Now Shift to Insurance Commissioner Lara
00:37
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: Deadline Passes for Insurance Legislation
05:17
Video thumbnail
KNTV-SF (NBC) - San Francisco, CA: Insurance Limbo
02:49
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: Insurance Bailout Deal Fails
00:28
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Insurance Legislation Efforts
03:02
Video thumbnail
KCBA (FOX) - Monterey, CA: Insurance Lobbyists and CA Lawmakers Are Trying to Strike a Deal
00:33
Video thumbnail
KTTV-LA (FOX) - Los Angeles, CA: California Home Insurance Crisis
04:47
Video thumbnail
KGO-SF, CA: Consumer Advocates Have Been Excluded From Negotiations by the Insurance Industry
02:57
Video thumbnail
KNBC - Los Angeles, CA: Car Insurance Rates Soaring
03:01
Video thumbnail
KCBA (FOX) - Monterey, CA: Insurers Are Working on a Secret Plan to Gut Current State Insurance Law
02:57
Video thumbnail
KPBS-San Diego, CA: Homeowner Insurance Companies are Leaving CA and Consumer Advocates Want Answers
02:59
Video thumbnail
KTVU(FOX) CA: Insurance Companies Coordinated an Effort to Stop Providing Homeowners Insurance in CA
00:30
Video thumbnail
ABC7 - Los Angeles, CA: How Can Insurance in California be Reformed?
03:19
Video thumbnail
KMPH-FRES (FOX) - Fresno, CA: CA Homeowners Insurance Crisis
01:53
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: Recording Reveals Potential Wildfire Bailout
00:58
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Secret Recording
02:40
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: California Insurers Want Deregulation
03:27
Video thumbnail
Insurance Lobbyist Taped Bragging About 11th Hour Legislative "Surprise" For Industry Bailout
01:04
Video thumbnail
KNBC-LA (NBC) - Los Angeles, CA: Car Insurance Rates Soaring
03:01
Video thumbnail
KFMB-SD (CBS) - San Diego, CA: Bracing for the Burn
05:17
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: Financial Risks in a Troubled insurance Market
03:52
Video thumbnail
KPBS - Los Angeles, CA: California's Homeowners Insurance Crisis is Spreading to Car Insurance
05:25
Video thumbnail
KPIX-SF (CBS) - San Francisco, CA: Farmers Insurance Limits New Policies In California
03:15
Video thumbnail
KTVU-SF (FOX) - San Francisco, CA: The Struggle to Find Homeowners Insurance
02:52
Video thumbnail
KGO-SF (ABC) - San Francisco, CA: Mileage Creep Warning
02:30
Video thumbnail
KPBS Television - San Diego, CA: Insurance Companies are Using Scare Tactics
03:03

Latest Insurance Releases

Insurance In The News

Latest Privacy Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Insurance Releases