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Fixing California’s broken insurance system

March 2, 2025

Stacy Korsgaden

OPINION by STACY KORSGADEN

California’s foundation is cracking under the weight of poor leadership – political ambition overriding practical governance

In recent developments, California Insurance Commissioner, Ricardo Lara, has denied State Farm an emergency rate increase of 22% for homeowners insurance. This decision, while seemingly consumer-friendly on the surface, spells disaster for the largest insurer in the state, and by extension, for countless California families.

Let’s examine the facts using the Rotary Club’s four-way test: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned? Lara’s actions fail this test spectacularly.

Denying the rate increase under the pretense of protection is a self-serving maneuver by a government official aiming higher in his career, not an act of altruism. This decision puts State Farm in a dire financial predicament, forcing it to consider drastic survival measures.

Should State Farm be forced to withdraw from California, families would be pushed towards the Fair Plan—a scheme offering limited coverage at higher costs. This is the direct result of political ambition overriding practical governance.

State Farm itself has stressed that its survival hinges on matching prices with financial risks, something Lara’s current policies hinder.

The true issue at hand goes beyond climate change—the usual scapegoat. The heart of the matter lies in excessive government intervention and mismanagement. For years, our thriving insurance industry has been undermined by increasing regulatory burdens and governmental overreach, shifting focus away from critical issues like land and fuel management, crime, and economic deregulation.

Insurance remains a cornerstone of any solid financial strategy, vital for both individuals and the state alike.

California’s foundation is cracking under the weight of poor leadership. It’s time for change. We need leaders who will repair our systems, not politicians who use them as stepping stones for their careers. We need new leadership to secure a stable and prosperous future for California’s insurance industry.

Stacy Korsgaden is a 35-year insurance and financial services professional and consumer advocate for insurance choice and customer protection. She can be reached at stacy@stacykorsgaden.com.

 


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Maybe the insurance companies should go after the politicians and agencies that failed to provide water and competent leadership causing this crisis. California taxpayers have been paying some of the highest tax and insurance rates in the nation and are now faced with a 22 percent increase do to factors beyond their control. Ask any small business owner if there have been years they didn’t make a profit its’ part of doing business.

What ever happened to insurance companies setting the standard for codes and regulations to prevent man made disasters like the recent fires. They should be demanding the State and local agencies remove fuel along roads and right of ways, keep homeless out of high fire danger areas, make sure reservoirs and fire storage is kept full and insure taxpayer money is spent on well trained fire crews and management.

Why should the insurance industry have to take on this roll? Because they have the most to loose, it seems they insist you have insurance to mitigate risk but don’t take part in mitigating the risk themselves. In short we need to hold their feet to the fire.


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Also dont forget the politicians that allowed the utility companies to ignore maintenance and upgradesctontheir infrastructures only requiring it after it was too late and instead of holding the companies responsible they allowed the costs for upgrades to just be passed onto the users.


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