00:00:02 [Speaker 1] After the Palisades and Eaton Fire, so many families are still navigating an insurance mess. 00:00:08 [Speaker 2] We trusted their promise to help us rebuild, but what we faced instead is confusion, lowball estimates, and a delay at every turn. 00:00:16 [Speaker 1] People impacted by the Eaton Fire are calling on California Insurance Commissioner Laura to resign. 00:00:22 [Speaker 1] This after a New York Times report said that Laura made a secret deal with insurers causing tens of thousands of people to lose their coverage before the fire. 00:00:31 [Speaker 3] Fire. 00:00:31 [Speaker 3] Those new regulations were also supposed to get people off the state backed fair plan, but since 2023, the number of fair policies has nearly doubled. 00:00:38 [Speaker 3] A fair plan is the insurer of last resort hearing. 00:00:42 [Speaker 4] In 2023, commissioner Lara secretly struck a deal with insurance companies, incentivizing them to dump tens of thousands of California's ahead of the Los Angeles fires while securing rate hikes for themselves. 00:00:57 [Speaker 5] And governor touted the 2023 agreement as a way to stop insurance companies from canceling state homeowners whose last insurance resort is California's fair plan. 00:01:09 [Speaker 6] There's a certain point where you start to really feel the pain just trying to survive and keep a house over your head. 00:01:16 [Speaker 6] Keep a house over my father's head and my little dog and my brother who actually is completely disabled. 00:01:22 [Speaker 7] We're tired of fighting. 00:01:23 [Speaker 7] Being denied benefits, being denied what you paid for is is insane. 00:01:29 [Speaker 2] I've had to pause my involvement in my business just to fight full time for what we already paid for. 00:01:34 [Speaker 2] What is even harder to accept and what literally keeps me up 00:01:38 [Speaker 7] at night is that no one in power 00:01:41 [Speaker 2] is holding these companies accountable. 00:01:43 [Speaker 8] Insurance companies dropped far more policies than they have promised to increase, due to Commissioner Lotta's deal. 00:01:54 [Speaker 9] The day after the November, California governor Gavin Newsom, was basking in a major victory with the passage of his redistricting ballot measure known as Proposition 50. 00:02:04 [Speaker 9] It's given him the momentum to be the Democratic presidential front runner in 2028. 00:02:10 [Speaker 9] But there was other major news involving Newsom that day that didn't get the same attention. 00:02:15 [Speaker 9] News that in the long run might come back to hurt him. 00:02:18 [Speaker 9] Tucked away below the fold on the front page of the New York Times that day was a story about a deal struck between large insurance companies in the state of California to allow insurers to dump tens of thousands of California policyholders ahead of this year's devastating LA Fires. 00:02:34 [Speaker 9] The agreement was struck into meetings out of public view and was marketed to help people living in fire prone areas get insurance coverage. 00:02:42 [Speaker 9] But instead, the office of insurance commissioner Ricardo Lara allowed insurance companies to get the policy rate increases they wanted while only appearing to cover areas more prone to wildfires. 00:02:55 [Speaker 9] It was a picture far too big to look at. 00:02:57 [Speaker 9] But if you look closely, the truce was there. 00:03:01 [Speaker 9] Welcome back to Smoke and Mirrors, a podcast series from Consumer Watchdog. 00:03:05 [Speaker 9] I'm Justin Klosko. 00:03:07 [Speaker 9] And in this episode, we'll talk about the revelations of a secret plan that pretty much affects everyone who owns a home and made California's fire recovery even harder. 00:03:21 [Speaker 4] I'm Joy Chen, a smoke damage survivor and executive director of the Eaton Fire Survivors Network. 00:03:27 [Speaker 4] We're here today to call on Governor Gavin Newsom to urge insurance commissioner Ricardo Lara to resign so that he can install new leadership at the Department of Insurance who will enforce the and rebuild an insurance system that every Californian can trust. 00:03:46 [Speaker 9] Following the fires that destroyed the communities of Altadena and the Pacific Palisades, policyholders are still scrambling to get their lives back on track. 00:03:55 [Speaker 9] Many are not getting the coverage promised to them by their insurance companies. 00:04:00 [Speaker 9] Now we know a little bit more on how we got here, thanks to the regulatory framework or lack thereof, that was put in place about two years ago. 00:04:09 [Speaker 9] A deal struck between insurance companies and the person to regulate them, insurance commissioner Ricardo Lara, enabled insurance companies to dump tens of thousands of Californians ahead of the LA fires and move them to the state run insurance plan of last resort, the California Fair Plan. 00:04:27 [Speaker 9] Here's one of the reporters in that New York Times story, Joe Becker, speaking to cap radio. 00:04:33 [Speaker 10] There were 50,000 that we were able to find by searching through these regulatory filings, and they were in largely concentrated in the riskiest part of state. 00:04:43 [Speaker 9] Armin Balber, Consumer Watchdog's executive director, summed it up this way. 00:04:48 [Speaker 8] What this New York Times investigation has done is look at the data after all of those rules have been implemented to find that, in fact, fair plan enrollment doubled since the commissioner announced his deal. 00:05:01 [Speaker 8] Insurance companies dropped far more policies than they have promised to increase, due to commissioner Latta's deal. 00:05:09 [Speaker 8] In every respect, the insurance crisis has gotten worse because of what Latta did. 00:05:14 [Speaker 9] But that's not relations were advertised to the public by the insurance commissioner when they came out. 00:05:19 [Speaker 9] LADA said that when companies want to file for rate increases, they will have to write policies in fire prone areas. 00:05:27 [Speaker 9] That was the deal. 00:05:29 [Speaker 11] Insurance companies, for the first time, are committing to writing 85% of their business in the wildfire distress areas. 00:05:37 [Speaker 9] But a loophole signed off by a lot of allowed companies to plead hardship and receive a waiver or ensure as little as only 5% more of their market share from the year. 00:05:47 [Speaker 8] He announced the plan in 2023. 00:05:49 [Speaker 8] He said when this is over, I'm gonna give insurance companies rate hikes using these news tools, but I'll make them increase their policies. 00:05:57 [Speaker 8] But the start date was whenever in 2025 or 2026 they get those rate increase requests approved. 00:06:05 [Speaker 8] That means for the last two years, they've been busy dumping policyholders less than right, so they have a lower baseline to start from. 00:06:12 [Speaker 9] Here's the New York Times reporter, Joe Becker, once again. 00:06:16 [Speaker 10] In many other cases, designated areas that minister that commissioner Laura Drew don't actually overlap don't neatly overlap with the fire zones and, in fact, extend far beyond them. 00:06:28 [Speaker 10] So now you could not only not have to do 85%, you could do 5% a year in ZIP codes and in areas which were, you know, parts of which were or much of which is relatively safe. 00:06:42 [Speaker 9] So there were ZIP codes where only a tiny sliver overlap with the fire zones, and that entire ZIP code would count towards these so called unders and guess who else has been touting the 85% number but leaving out the devil in the details. 00:06:55 [Speaker 3] The benefit of that now, part of the strategy, is a requirement to come into California market and also to ensure in what we refer to as the WUI, which is the wildland urban interface, and to cover 85% of the WUI in return for those rate increases. 00:07:14 [Speaker 9] Yes. 00:07:14 [Speaker 9] Governor Gavin Newsom. 00:07:16 [Speaker 9] But it's just not true. 00:07:18 [Speaker 9] So if the California housing crisis is thrip in this analogy, insurance companies and those representing us in government decided to put a new coat of paint on instead of plugging the leak. 00:07:29 [Speaker 9] It just looks like policyholders are getting more coverage, when in reality they aren't because so many were dropped in the first place. 00:07:37 [Speaker 9] We've been talking to policyholders up and down the state over the past couple of years, and we've heard it all, drop policies or astronomical rate hikes. 00:07:47 [Speaker 9] Joy Chen again. 00:07:48 [Speaker 4] Now that deal was supposed to protect Californians from the fair plan. 00:07:53 [Speaker 4] Instead, fair plan enrollment nearly doubled, and thousands of families lost coverage just before the disaster struck. 00:08:02 [Speaker 4] For us, Eaton and Palisades fire survivors you see here, that revelation was a slap in the face. 00:08:09 [Speaker 9] Bronislav Ketzmann has become exhibit a for what insurance companies in the state of California created. 00:08:16 [Speaker 9] He's had a devastating 2025. 00:08:18 [Speaker 12] So State Farm, informed us in July that they would be not, renewing our policy. 00:08:28 [Speaker 12] The exact wording, you know, the letter, I don't recall, but maybe it had to do something with the, overall market conditions or something about the location of the property. 00:08:40 [Speaker 12] I don't recall. 00:08:42 [Speaker 12] But they gave us, a couple of months to find a replacement or to switch to Cal Fair. 00:08:48 [Speaker 12] So we tried to look for any other insurance. 00:08:53 [Speaker 12] It didn't, pan out, so we decided to to go with the Cal Fair. 00:08:58 [Speaker 12] When all was said and done, our premium went up, basically a factor of two. 00:09:06 [Speaker 12] And our coverage, unfortunately, went down by about a third. 00:09:12 [Speaker 9] The Katzmans had been State Farm customers for twelve years and never once filed a claim. 00:09:17 [Speaker 12] In January, you know, we lost our house. 00:09:19 [Speaker 12] We definitely wouldn't have enough from the insurance proceeds to, to rebuild the same kind of house. 00:09:26 [Speaker 12] So we would be building something smaller if we do rebuild. 00:09:30 [Speaker 12] Unfortunately, being, you know, around the block a few times, you know, I'm not surprised that the that the consumer is the last thing they care about, unless it's the bottom line. 00:09:41 [Speaker 9] So Katzmann is one of tens of thousands of households that were dropped by insurance companies since the regulations were proposed a couple years ago. 00:09:50 [Speaker 9] What's shocking is that it appears that the Department of Insurance doesn't make available current data about people who have been non renewed by their insurer. 00:09:58 [Speaker 9] Here's that New York Times reporter, Joe Becker, once again. 00:10:01 [Speaker 10] The state really doesn't 00:10:12 [Speaker 9] raises a lot of questions, including whether or not the insurance commissioner and his staff knew that a wave of nonrenewals would be coming as a result of the deal. 00:10:21 [Speaker 9] But either way, it happened, and policyholders are experiencing a sort of cognitive dissonance when we hear our leaders talk about insurance. 00:10:30 [Speaker 9] After her Palisade's home burned down on the night of January 7, Jill Spivak said she had to put her business on hold so she could devote the time needed to address the insurance claims battle. 00:10:41 [Speaker 2] Several months ago, commissioner Ricardo Lara met on a Zoom meeting with 250 fire victims, heard our stories, and promised to scrutinize the insurance company's managing of our claims. 00:10:52 [Speaker 2] But the next day, he approved a billion dollar rate increase. 00:10:56 [Speaker 3] California is among the most affordable insurance markets in the country because the voters initiated a framework on regulation that denied significant rate increases. 00:11:09 [Speaker 3] As a consequence of that, people started it. 00:11:13 [Speaker 3] And the reforms we've just put into place allow for more rapid rate increases. 00:11:19 [Speaker 9] It just seems like the governor is saying, hey, rate increases are good. 00:11:23 [Speaker 9] Now vote for me. 00:11:28 [Speaker 9] Zaire Calvin summed up the discontent people are feeling. 00:11:32 [Speaker 9] Born and raised in Altadena, Calvin lost his sister due to the fires. 00:11:36 [Speaker 7] We're asking for justice, and justice is literally from what we paid for. 00:11:41 [Speaker 7] That's like paying for a car and then somebody take a yoke from you and saying you don't deserve it. 00:11:46 [Speaker 7] It doesn't make sense. 00:11:49 [Speaker 8] The corruption of this insurance commissioner goes back to the very beginning of his first term when in 2019, he took money from insurance companies at secret fundraising meetings and then acted on their behalf at the Department of Insurance on matters before him. 00:12:04 [Speaker 8] But the corruption of this commissioner goes back to day one. 00:12:08 [Speaker 8] It's time to address it. 00:12:09 [Speaker 8] Governor Newsom, it's time to put someone new in the job. 00:12:13 [Speaker 9] And if the governor doesn't put someone new in the he might not get the job that he wants. 00:12:19 [Speaker 13] No comment from governor Gavin Newsom. 00:12:21 [Speaker 13] What's the long term plan of these wildfire victims if there's no resignation from Lara and nothing from the governor? 00:12:28 [Speaker 5] They say they're not gonna support the governor on his presidential bid. 00:12:32 [Speaker 5] They were very open about that. 00:12:33 [Speaker 5] If he doesn't come forth in some way, they're saying that they're gonna be very clear and very loud when he gets on the national stage. 00:12:44 [Speaker 9] Smoke and Mirrors is reported and produced by Cosco, engineering and sound design by John Ennis, our editor is Carmen Balber, and our executive producer is Jamie 00:12:56 [Speaker 3] Court.