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Insurance Commissioner candidate Jane Kim wants to establish a state-run single-payer disaster insurance program with guaranteed coverage. Gubernatorial candidate Xavier\u00a0Becerra pledges to freeze insurance rates in an affordability state of emergency.<\/p>\n
Lea Suzuki \/ S.F. Chronicle<\/p>\n
California\u2019s election results<\/a> are still being tabulated as of this writing. But it doesn\u2019t take binoculars to spot a giant red flag flying on the horizon.<\/p>\n The leading Democratic candidates for two key positions are disconcertingly receptive to a disastrous idea: blowing up California\u2019s insurance market\u00a0just as it\u2019s starting to reach more stable ground<\/a>. This would, in turn, destroy the state\u2019s efforts to build more housing and make it virtually impossible for would-be homebuyers to secure a mortgage.<\/p>\n Article continues below this ad<\/p>\n After years of insurance companies severely restricting business or leaving the state altogether \u2014 thanks to climate-change-fueled megafires and state regulations that make\u00a0it near-impossible to adequately price this risk \u2014 they\u2019re slowly beginning to return due to sweeping reforms enacted by outgoing Insurance Commissioner Ricardo Lara<\/a>. The reforms aren\u2019t perfect, and the devastating 2025 Los Angeles wildfires exposed issues that urgently need to be addressed. But they\u2019ve also led to meaningful, if fragile, progress. Among other things, the rate of growth is finally beginning to decrease for the FAIR Plan<\/a>, which offers bare-bones coverage for those who can\u2019t get it anywhere else\u00a0\u2014 a critical step to improving the health of the market<\/a>.\u00a0<\/p>\n Yet Xavier Becerra, California\u2019s likely next governor, has rashly\u00a0\u2014 and ridiculously\u00a0\u2014 pledged to freeze insurance rates<\/a> if he\u2019s elected by declaring an affordability state of emergency.\u00a0<\/p>\n San Francisco Chronicle Logo<\/p>\n Make us a Preferred Source to get more of our news when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n Becerra\u2019s vow makes no sense on multiple fronts \u2014 first of all, a\u00a0blanket freeze may not even be legal<\/a>. 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<\/a> for raising rates in the name of consumer protection.)<\/p>\n In a vacuum, it would be easy to write off Becerra\u2019s 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\u2019s currently the leading vote-getter for insurance commissioner<\/a>.<\/p>\n Article continues below this ad<\/p>\n 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.\u00a0<\/p>\n How much this system might cost and how exactly it would work are conveniently left out of her pitch\u00a0\u2014 probably because it\u2019s an idea panned not just by insurers, but also by their fiercest and most frequent opponents, the consumer-advocacy group Consumer Watchdog<\/a>.\u00a0<\/p>\n If Kim were elected, however, the risk isn\u2019t so much that she\u2019d actually be able to establish such a system; all of the insurance policy and industry experts I\u2019ve spoken with doubt that it\u2019s feasible.\u00a0<\/p>\n It\u2019s that she would be able to leverage her considerable political talents to sway the pliable Becerra, who\u2019s already vacillated on policies such as single-payer health care<\/a>. If he can be convinced to fully embrace populist insurance politics, it could upend California\u2019s market just as it\u2019s beginning to show meaningful signs of recovery.\u00a0<\/p>\n 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.\u00a0<\/p>\n Article continues below this ad<\/p>\n Yet that\u2019s exactly the route both Kim and Becerra are taking.\u00a0<\/p>\n \u201cWe should start acting like the big state that we are,\u201d Kim said in an endorsement interview with the Chronicle editorial board<\/a>, of which I\u2019m a member. \u201cI don\u2019t actually believe the insurers want to exit our market.\u201d<\/p>\n This short-sighted mentality is a trap voters need to avoid falling for.<\/p>\n Still, it\u2019s understandable why Kim\u2019s take-no-prisoners message has proved resonant with voters, many of whom are frustrated with\u00a0widespread rate increases<\/a>, lethargic claims processing<\/a> and the slow pace of rebuilding<\/a> in the wake of the Los Angeles wildfires.\u00a0<\/p>\n And Kim is a particularly persuasive messenger\u00a0\u2014 articulate, poised, confident and smart, she rattles off statistics, analogies and arguments in clear, easily digestible ways.\u00a0<\/p>\n Article continues below this ad<\/p>\n \u201cPolitics is an art, and this is going to sound very overly confident \u2014 I think I\u2019m good at it,\u201d Kim said in her endorsement interview. \u201cThe ultimate job that I\u2019m 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.\u201d<\/p>\n But California doesn\u2019t need a politician inveighing against its new and improved insurance strategy \u2014 it needs a policy wonk who can carefully and competently implement it while identifying snags and potential fixes.<\/p>\n To her credit, Kim hasn\u2019t proposed a blanket freeze on insurance rates \u2014 rather, she\u2019s floated the idea of preventing policyholders\u2019 rates from rising simply because they filed claims.\u00a0<\/p>\n As for Becerra, it\u2019s 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 \u201cfour months\u201d \u2014 which likely wouldn\u2019t be long enough to significantly impact the market.\u00a0\u00a0<\/p>\n When we asked Becerra what he would do during those four months, he said he would \u201ctry to pull the curtain back a bit\u201d on insurance companies\u2019 finances and make them justify why they\u2019re raising rates or refusing to renew policies. When we noted that this already happens during the rate review process, Becerra responded, \u201cI\u2019ve not seen the books. (Lara\u2019s) not shown me the books. I\u2019d like to see the books.\u201d<\/p>\n Article continues below this ad<\/p>\n The fact that Becerra is willing to play semantic games like this so many years into California\u2019s insurance crisis is disturbing.<\/p>\n 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.<\/p>\n