California Insurance Commissioner Ricardo Lara has received much-deserved criticism after news reports revealed he has taken 46 international trips since 2019—11 paid by taxpayers. His travel schedule included visits to Bogota, Paris and Egypt. Given the significance of the California insurance crisis, we’re taken aback that he spent so much time traveling rather than immersed in the nitty gritty of insurance regulation.
Lara gave a speech at the Bermuda Risk Summit in March, which caused him to miss a Senate informational hearing and sparked the media’s deeper review of his travel. We give him a pass on that one as Bermuda is home to the world’s reinsurance industry. It’s a legit conference. While there, he admirably announced his plan to address intervenor fees.
The legislative hearing was announced after he accepted the engagement, but he has missed seven other hearings for travel-related reasons since 2019, per ABC 7 News. “Lara’s staff has been unable to identify the business purpose for nearly all of them,” it reported after the news broke. The travel involved study tours, climate presentations and a United Nations conference on sustainable finance. This is inexcusable.
Insurers have been suspending new underwriting largely because of California’s bizarre system of insurance regulation. Voters in 1988 passed Proposition 103, which gave the insurance commissioner power to approve rates. It’s been difficult for insurers to adjust rates as wildfire costs mounted, so they’ve been heading for the exits and leaving property owners in a precarious situation.
By his own admission, Lara was slow to respond. But he later developed the Sustainable Insurance Strategy, which includes laudable reforms (e.g., allowing insurers to include rising reinsurance costs in their premiums and to use catastrophe models). The strategy is finally working, as several insurers have recently announced their plan to write more policies.
But this luxury travel schedule threatens to undermine the good work that he’s done. It makes us wonder how much of the crisis could have been avoided had he spent more time in Sacramento and less time in Singapore and Cape Town.
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