California chooses next insurance commissioner: Jane Kim or Ben Allen

Californians are choosing a new insurance commissioner after almost a decade of deadly wildfires that threw the state’s property insurance market into a crisis from which it is still trying to recover.

Two Democrats are competing for the position for the first time. Jane Kim, the former San Francisco supervisor, wants to create a public disaster insurance program. State Sen. Ben Allen says a comprehensive wildfire-mitigation plan is the way to fix what ails insurance in California: availability, especially in areas of high fire risk; and affordability, as insurers raise premiums, citing increasing disaster risk and rising replacement costs.

Almost half of the state’s residents report paying more for home or renters’ insurance than last year, according to a new poll by the Insurance Fairness Project, a national insurance information hub, and Data for Progress.

The commissioner also regulates auto, life, pet and some types of health insurance, as well as workers’ compensation. It’s a wide-ranging position that some experts say requires a “brutal” balancing act.

Allen, whose constituents include Palisades Fire survivors, would bring recent legislative experience in insurance and other related topics, such as utility liability for wildfires. 

Kim last held office in 2019, with experience that includes passing the state’s first $15 minimum wage and free community college for San Francisco residents.

An Allen victory would also be a win for the California Democratic Party, which endorsed him, and the varied labor and business advocacy groups that supported him. Business interests also spent millions of dollars supporting him and opposing Kim, including outside political action committees funded by investor-owned utility companies such as Pacific Gas & Electric and Southern California Edison, as well as tech companies and billionaires.

Kim said at a debate last month between the two candidates that she is running “against the status quo.”

A win by Kim would be the latest triumph in the progressive wave and proof of the enduring popularity of the populist message of Vermont Sen. Bernie Sanders, her most famous endorser. Her top direct donors are labor unions. The California Labor Federation endorsed her, and the Working Families Party, the group she used to lead, provided the bulk of outside funding to her campaign.

Kim has acknowledged that launching public disaster insurance would be hard, and could take years. Her plan involves diverting insurance premiums homeowners pay to their insurance companies to a public program that guarantees wildfire coverage. The idea has many critics, including not only the insurance industry but also consumer groups with insurance expertise, which warn of tremendous risk to the state. 

Allen said at the debate that Kim’s public insurance plan would not work in California, calling it “unmoored and unresearched.” Kim called his plans more of the same.

Whoever voters choose to replace Commissioner Ricardo Lara will face plenty of challenges in dealing with past disasters as well as preparing for future ones. 

The new commissioner will have to hold insurers accountable for paying claims quickly and fairly, as survivors of last year’s Los Angeles County fires continue to deal with insurance delays and denials. Lara’s department has pending actions against State Farm, the biggest individual insurer in the state, and the last-resort FAIR Plan over their handling of claims from the Eaton and Palisades fires.

As California braces for El Niño, insurance will play an important role. The current commissioner, the insurance industry and other experts are urging the state’s residents to protect their properties against flooding and wind damage, and to consider flood insurance.