By The Editorial Board of THE LOS ANGELES TIMES
July 26, 2019
Ricardo Lara has served as insurance commissioner for not quite eight months, and in that short time he’s managed to cast a pall over the Department of Insurance by taking donations from insurance company representatives and their spouses (when he said he wouldn’t, in the tradition of his predecessors) and then reversing decisions to the benefit of some of those donors. The Democrat and former state senator also may have violated the law by meeting with an executive of one of the companies while its case was pending before his department.
When the donations were revealed earlier this month, we noted that they raised the appearance of undue influence. With subsequent revelations of his office’s actions affecting one the insurer Applied Underwriters, it now seems there was good reason for concern. We suspect (and hope) that this is a case of ignorance and inexperience by the new commissioner, rather than something more sinister. But we just don’t know. Lara says he has returned the donations, offering a hard-to-believe excuse that he didn’t realize where the donations came from despite acting as his own campaign treasurer. This is unacceptable from the man charged with protecting Californians against insurance-company gouging.
Empowered to regulate premiums for car, home and business policies, the insurance commissioner makes decisions that directly impact the pocketbook of nearly every Californian. In early May, Lara signed off on two proposed decisions by administrative law judges that would have forced Applied Underwriters, a workers comp insurer owned by Warren Buffet’s Berkshire Hathaway, to collect less than it sought from two small business customers. Later that month, Lara’s reelection campaign received $46,500 in donations from Applied executives and their spouses in a single day. In early June, Lara granted the company’s request to reconsider the decisions, and in July, his office amended the decisions in a way that might be legitimate — but which is financially beneficial to Applied and is tainted by his acceptance of the contributions.
Lara says that he didn’t have much to do with the decisions. His legal team signed off on the original rulings, he says, and only later discovered inconsistencies that needed to be changed lest the two companies be left without any workers comp coverage, imperiling their employees. This is plausible, considering Lara’s inability to fully articulate publicly the legal implications of the changes and his lack of relevant experience when he was elected. Nevertheless, the decisions have been called into question by his own actions and further muddied by his bumbled response.
The scandal couldn’t have hit the department at a worse time. The state is facing a serious wildfire insurance crisis, and it needs a regulator who is well-versed, engaged and above reproach.