Consumer Watchdog says, New York Times Investigation Finds Lara's Plan Incentivized Insurers' Dumping Of Policyholders Prior To LA Fires, Doubling FAIR Plan Enrollment

LOS ANGELES, Nov. 3, 2025 /PRNewswire/ -- A New York Times investigation has found Insurance Commissioner Lara's 2023 plan to deal with California's insurance crisis incentivized insurance companies to dump policyholders before the LA wildfires in order to get rate hikes and allowed companies to avoid insuring people in high-risk wildfire areas. 

Bottom line, the Times reports: "Insurance companies will be able to raise rates and offload billions of dollars in costs and liabilities to ratepayers while taking on few, if any, new customers in high fire-risk areas."

Among the key findings of the story, "California Promised Insurance Relief, But Delivered Loopholes," are:

"The central promise was that insurers would have to write policies in fire-prone areas at a rate equal to at least 85 percent of their market share across the state [to get higher rates]. But a New York Times investigation has found that a series of loopholes quietly negotiated by the insurance industry all but eliminated that guarantee… A pair of what industry lobbyists called 'offramps' were negotiated as alternatives to the 85 percent rule. Insurers can claim hardship and petition the commissioner for a waiver; or they can take advantage of an option, originally intended just for small companies, that requires only that they increase the number of policies they have in the designated distressed zones by 5 percent over the previous year….But the way the provision was written meant that insurers that had spent much of 2024 dumping customers by the tens of thousands would, at least initially, be able to meet an even lower bar."

"In the six months after the deal was announced, California's three largest insurance groups informed the state of their plans to dump nearly 50,000 existing policies, five times the number filed by those companies in the 20 months preceding the deal. And the new regulations will effectively reward them for doing it. More than a fifth of the nonrenewals — about 11,000 policies in total — were in ZIP codes within or adjacent to areas that would burn in the January fires, the Times analysis found. The vast majority of those were in and around Pacific Palisades, where fire later destroyed more than 6,800 structures."

"Vast swaths of the designated areas where insurers must write new policies do not in fact overlap with areas that California's state fire marshal deems to be the most fire-prone, the investigation found, meaning that insurers can load up on coverage in areas the state considers to be safer and still qualify to charge higher rates."

"And while the regulations were billed as an attempt to get homeowners off the state's overburdened last-resort insurance program, FAIR, the number of residential FAIR policies has nearly doubled since the new insurance deal was announced, rising to 625,033 from 320,581, the Times review found."

The Times also found that insurance companies applying for rate hikes worth a quarter of a billion dollars under the plan recently have not increased coverage in high-risk areas:

"The incentive to shed customers in risky areas remains in place for insurers that have yet to file for rate increases under the new system. So far, five companies — serving 20 percent of the California market — have filed for increases. Mr. Lara said that is a promising sign that the new incentives are luring insurers back. But the total number of policies they say they will add in distressed areas — 2,500 — is not really a net gain, because it does not take into account the number of policies that some of those same companies dropped since the deal was announced. Those companies now stand to collect nearly $250 million in additional premiums. Each filed for rate increases just under the 7 percent threshold that would trigger the requirement for public hearings, and could seek additional increases later."

"Commissioner Lara's plan incentivized insurance companies to dump Eaton and Palisades homeowners prior to the fires and pushed them into the low benefit, high cost FAIR plan," said Court, president of Consumer Watchdog. "Lara's plan is a complete betrayal of policyholders, who will have to pay a lot more for their insurance without companies having the obligation to insure more people in high-risk areas, despite Lara's promises. He gave away the store to the insurance companies and, as a result, Californians have twice as many people in the FAIR plan than when his deal was announced. Lara's epic failure and betrayal of policyholders is not only a stain on California but threatens the viability of our insurance and real estate markets. Governor Newsom must take action as this reflects as much on him as on Lara."

SOURCE Consumer Watchdog