Insurance Commissioner candidate Jane Kim wants to establish a state-run single-payer disaster insurance program with guaranteed coverage. Gubernatorial candidate Xavier Becerra pledges to freeze insurance rates in an affordability state of emergency.
Lea Suzuki / S.F. Chronicle
California’s election results are still being tabulated as of this writing. But it doesn’t take binoculars to spot a giant red flag flying on the horizon.
The leading Democratic candidates for two key positions are disconcertingly receptive to a disastrous idea: blowing up California’s insurance market just as it’s starting to reach more stable ground. This would, in turn, destroy the state’s efforts to build more housing and make it virtually impossible for would-be homebuyers to secure a mortgage.
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After years of insurance companies severely restricting business or leaving the state altogether — thanks to climate-change-fueled megafires and state regulations that make it near-impossible to adequately price this risk — they’re slowly beginning to return due to sweeping reforms enacted by outgoing Insurance Commissioner Ricardo Lara. The reforms aren’t perfect, and the devastating 2025 Los Angeles wildfires exposed issues that urgently need to be addressed. But they’ve also led to meaningful, if fragile, progress. Among other things, the rate of growth is finally beginning to decrease for the FAIR Plan, which offers bare-bones coverage for those who can’t get it anywhere else — a critical step to improving the health of the market.
Yet Xavier Becerra, California’s likely next governor, has rashly — and ridiculously — pledged to freeze insurance rates if he’s elected by declaring an affordability state of emergency.
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Becerra’s vow makes no sense on multiple fronts — first of all, a blanket freeze may not even be legal. Second, insurance rates are overseen by the elected insurance commissioner, not the governor. Third, keeping insurance rates artificially low is arguably what got California into this crisis. (Proposition 103, a 1988 voter-approved measure, established an onerous process for raising rates in the name of consumer protection.)
In a vacuum, it would be easy to write off Becerra’s idea as empty campaign fodder that he has no intention or ability to actualize. But his vibes-based populism could find a receptive audience in Jane Kim, who’s currently the leading vote-getter for insurance commissioner.
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Kim, the Bernie Sanders-endorsed California director of the Working Families Party, is running on an aggressive platform that seeks to eviscerate the private insurance market by establishing a state-run single-payer disaster insurance program with guaranteed coverage.
How much this system might cost and how exactly it would work are conveniently left out of her pitch — probably because it’s an idea panned not just by insurers, but also by their fiercest and most frequent opponents, the consumer-advocacy group Consumer Watchdog.
If Kim were elected, however, the risk isn’t so much that she’d actually be able to establish such a system; all of the insurance policy and industry experts I’ve spoken with doubt that it’s feasible.
It’s that she would be able to leverage her considerable political talents to sway the pliable Becerra, who’s already vacillated on policies such as single-payer health care. If he can be convinced to fully embrace populist insurance politics, it could upend California’s market just as it’s beginning to show meaningful signs of recovery.
At such a delicate moment, the last thing California needs is bombastic, poorly thought-through policies paired with a reflexively antagonistic attitude toward the insurance industry.
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Yet that’s exactly the route both Kim and Becerra are taking.
“We should start acting like the big state that we are,” Kim said in an endorsement interview with the Chronicle editorial board, of which I’m a member. “I don’t actually believe the insurers want to exit our market.”
This short-sighted mentality is a trap voters need to avoid falling for.
Still, it’s understandable why Kim’s take-no-prisoners message has proved resonant with voters, many of whom are frustrated with widespread rate increases, lethargic claims processing and the slow pace of rebuilding in the wake of the Los Angeles wildfires.
And Kim is a particularly persuasive messenger — articulate, poised, confident and smart, she rattles off statistics, analogies and arguments in clear, easily digestible ways.
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“Politics is an art, and this is going to sound very overly confident — I think I’m good at it,” Kim said in her endorsement interview. “The ultimate job that I’m running for is a political job. It is the job of sitting across from insurers, the governor, the state Legislature and being able to work out a deal.”
But California doesn’t need a politician inveighing against its new and improved insurance strategy — it needs a policy wonk who can carefully and competently implement it while identifying snags and potential fixes.
To her credit, Kim hasn’t proposed a blanket freeze on insurance rates — rather, she’s floated the idea of preventing policyholders’ rates from rising simply because they filed claims.
As for Becerra, it’s not even clear what he means by a rate freeze. In his endorsement interview, he suggested that an affordability state of emergency might last only “four months” — which likely wouldn’t be long enough to significantly impact the market.
When we asked Becerra what he would do during those four months, he said he would “try to pull the curtain back a bit” on insurance companies’ finances and make them justify why they’re raising rates or refusing to renew policies. When we noted that this already happens during the rate review process, Becerra responded, “I’ve not seen the books. (Lara’s) not shown me the books. I’d like to see the books.”
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The fact that Becerra is willing to play semantic games like this so many years into California’s insurance crisis is disturbing.
Guest opinions in Open Forum and Insight are produced by writers with expertise, personal experience or original insights on a subject of interest to our readers. Their views do not necessarily reflect the opinion of The Chronicle editorial board, which is committed to providing a diversity of ideas to our readership.
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Even more disturbing is the fact that both Becerra and Kim appear willing to gamble with the future of housing construction and affordability in California by lazily casting insurance companies as an intrinsic, always-already enemy.
You don’t have to love or even like insurance companies. But it would be nice to have the incoming leaders of the world’s fourth-largest economy be willing to acknowledge that — gasp! — California can’t have nice things without a functional insurance market.
Emily Hoeven is a columnist and editorial writer for the Opinion section.