California oversight agency asks: Why is insurance commissioner absent from hearings?

Reality Check is a Sacramento Bee series holding officials and organizations accountable and shining a light on their decisions. Have a tip? Email realitycheck@sacbee.com.

A California oversight agency held its second hearing on the state’s homeowner insurance issues Thursday. Like the first meeting, there was a conspicuous person absent: Insurance Commissioner Ricardo Lara.

Major companies are dropping policies and limiting business across the state, leaving homeowners with fewer options and higher prices.

The Little Hoover Commission, which makes recommendations to the governor and Legislature, has vowed to study the issue and come up with possible solutions.

“I think it’s a mistake,” Pedro Nava, the chair of the agency, said of Lara’s absence. The oversight body’s staff has made multiple requests to the department, he said, and one of its commissioner even contacted Lara directly. Those offers were not accepted.

“It is extraordinarily unfortunate,” said Nava, a former assemblyman.

The commission, created in the 1960s, reviews state government operations and policies. Other issues it are exploring include retail theft and a state environmental quality act. Its 13 members are made up of people appointed by governors and state legislators, as well as California lawmakers themselves.

Commissioner David Beier, a managing director of an investment firm, said their work would be lessened without the involvement of Lara or his department.

“We cannot proceed with them being silent and not participating,” Beier said. “We’ve got too many questions for what they do or how they should reform themselves. And we don’t want to waste the time of the Legislature by proposing things that are not a result of consulting them.”

Commissioner Gil Garcetti, the former Los Angeles County district attorney, agreed: “We need to hear from the insurance commissioner’s office, ideally the insurance commissioner.”

None of the state lawmakers who serve on the oversight commission spoke during the virtual meeting.

When asked about the comments, department spokesman Gabriel Sanchez responded in an emailed statement: “Commissioner Lara has testified at several legislative oversight hearings over the years on his efforts to safeguard the integrity of the state’s insurance market.”

He did not say if Lara, or a department representative, would speak at a future hearing.

Lara’s top priority, the statement went on to say, is pushing forward a series of rule changes this year that he hopes will more insurance more available to homeowners.

The commission has the ability to compel that people participate, through a subpoena. Nava questioned if issuing one was the best way to proceed, adding the agency would make another request for Lara or a department representative to take part.

Ethan Rarick, the oversight body’s CEO, said in an interview after the hearing the commission has not issued a subpoena during his five years in the role and he was not aware of the last time it did, if at all. He said the agency would work with Lara, or a department representative, to find a convenient time to participate and that they could also submit information in writing.

During the commission’s March hearing, former insurance commissioner Dave Jones spoke, along with people representing insurers and consumer groups. Thursday’s speakers included Victoria Roach, president of the California FAIR Plan, the state’s insurer of last resort.

Roach described how the private association has seen a rapid rise in policyholders in recent years as major insurance companies have paused or restricted new business in the state.

She also said it was “very possible” some policyholders with the FAIR Plan could see “substantial increases” in the future, if it is allowed to use computer modeling to estimate fire risks and recover costs related to buying its own insurance.

The department currently does not allow either but is proposing to change that as part of the rule revisions it is unveiling this year. Roach said the insurer would work with the department to incorporate large increases over time “so people aren’t hit as much up front.”

Before the almost three-hour hearing ended commissioners did not say if and when they would hold a third hearing on the topic.