Ricardo Lara Is the Insurance Industry’s Favorite Democrat

Democrat Ricardo Lara is running for reelection as California state insurance commissioner in today’s primary. A new complaint alleges that he’s secretly accepting insurance industry donations after swearing them off — and it’s not the first time.

California insurance commissioner Ricardo Lara speaking with attendees at the 2019 California Democratic Party State Convention in San Francisco, California. (Gage Skidmore / Flickr)

When Californians head to the polls today to pick their nominees for governor and US senator, they’ll also be voting on nominees for one down-ballot office that’s critically important not just for California but for the entire country: the state insurance commissioner.

And according to a new complaint, the incumbent in the race, Democrat Ricardo Lara, could once again be benefiting from donations by insurance companies he’s supposed to be regulating.

Last month, the advocacy group Consumer Watchdog filed a complaint with the California Fair Political Practices Commission (FPPC) asking it to look into whether it was illegal for a pro-Lara independent expenditure committee to accept $125,000 in support from two closely tied LGBT political committees, after one of them received a similar amount of funding from the insurance industry.

“It looks like the insurance industry is secretly funneling campaign donations to support Lara’s election, but is not disclosing those contributions,” Consumer Watchdog executive director Carmen Balber, who wrote the complaint, told us. “This apparent money laundering, after the commissioner promised the public to do better, is incredibly disturbing.”

Lara, who took office in 2019, has been repeatedly criticized by consumer advocates for being too deferential to the insurance industry that he regulates; not doing enough to protect ordinary Californians who purchase home, car, and health insurance; and not taking advantage of his unique regulatory powers to fight climate change.

Some critics suggest that Lara’s coziness with the industry — and the way that it could be trying to come to his rescue with a last-minute infusion of industry-linked cash — may be to blame.

“To be completely independent of the industry he regulates, California’s insurance commissioner needs to refuse insurance industry campaign contributions,” said Balber. “How can the public believe that the commissioner’s actions are truly in their interests when not only is he apparently accepting support from the insurance industry, but attempting to hide that support?”

A Climate Change Bully Pulpit

The position of insurance commissioner is often a low-profile office. But as the chief government watchdog of an industry worth over $300 billion in California alone, the insurance commissioner is actually one of the most important state regulators in the country — especially when it comes to addressing climate change.

The insurance industry has a critical role in fueling climate change, both through insuring fossil fuel development projects and through investing consumers’ premiums in fossil fuel companies. Insurance commissioners, therefore, have a unique ability to use regulation to curtail or at least shine a light on these destructive activities.

California’s insurance commissioner has “at times been a leader on driving needed transformation in the insurance industry,” said Yevgeny Shrago, policy director of the climate program at good government group Public Citizen and an expert in insurance regulation.

Because California is such a large market, the insurance commissioner has a bully pulpit that can be used to change the actions of insurers that operate nationwide. Lara’s predecessor, Dave Jones, nudged insurance companies into divesting over $4 billion worth of investments in coal and required large insurance companies to publicly disclose their investments in fossil fuels.

But these efforts have largely stalled under Lara, who, to the disappointment and dismay of climate advocates, has done little to force insurers to take accountability for their contributions to climate change. “California is now no longer the leader in insurance regulation on climate change issues,” said Shrago. “That mantle has really fallen to New York.”

Of course, who holds the position of insurance commissioner is especially important for Californians. As the state’s wildfires mount in range and intensity with each passing season, insurance companies are seeking to raise rates to cover their growing losses or in some cases withdrawing coverage from high-risk areas altogether.

The insurance commissioner is in charge of implementing the state’s policy response to this issue. Consumer advocates say the best solution is for the department of insurance to pass regulations requiring insurance companies to offer coverage to homes that take fireproofing measures, such as installing flame-resistant roofing. Homes built to the latest fireproofing standards are much less likely to burn in wildfires, driving down the average cost of insuring them.

Lara’s department of insurance has made some moves towards such regulations, but too slowly and with proposals that are too mild, critics charge.

Lara initially seemed like a strong bet for reelection, due in part to support from California governor Gavin Newsom (D), Senator Alex Padilla (D-CA), and several other statewide Democratic elected officials. But after all of the state’s major newspapers, citing Lara’s ethics scandals, endorsed rival candidate and state assemblymember Marc Levine (D) to replace Lara, his reelection may no longer be such a sure thing.

“Last-Minute Mudslinging”

Between June 2021 and April this year, insurance companies donated $122,500 to the political fund of the California legislature’s LGBTQ legislative caucus. The donors included GEICO, Farmers Group, and Anthem. In April 2022, the Lesbian, Gay, Bisexual & Transgender (LGBT) Caucus Leadership Fund sent $75,000 to Equality California, an LGBT organization.

Last month, the LGBTQ caucus and Equality California donated a combined $125,000 to an independent expenditure committee supporting Lara. Lara was vice chair of the LGBTQ caucus when he was a state senator and remains listed on its website as an ex-officio member.

The Consumer Watchdog complaint alleges that Lara’s campaign or the LBGTQ caucus committee may have violated the state’s prohibition on campaign money laundering if it “coordinated the contributions of insurance companies to the LGBTQ Caucus committee, then to the Lara [independent expenditure] committee, which failed to disclose the true source of the contributions.”

The FPPC is investigating the complaint but won’t issue any findings until after the June 7 primary.

This isn’t the first time Lara’s campaign has come under fire over insurance industry donations. Lara accepted over $270,000 from donors with ties to the insurance industry, despite a campaign pledge to forgo such cash. In the wake of reporting on the insurance industry donations in 2019, Lara promised to scrutinize his fundraising sources more carefully, returned over $83,000 of his campaign haul, and temporarily suspended his fundraising.

Lara’s two immediate predecessors in the role of insurance commissioner, Dave Jones and Steve Poizner, both swore off contributions from the insurance industry.

Asked for comment by us, the Lara campaign declined to address the allegations. Instead, a campaign spokesperson emailed us a statement attacking Consumer Watchdog and suggesting that Levine was behind the complaint.

“I’m surprised that this blatant last-minute mudslinging attempt by Levine is getting any coverage — their whole point in filing these meritless things is to gin up free media,” said campaign spokesperson Robin Swanson. She accused Levine of putting “a dark money lobbyist on state payroll” and said he “has been fined twice by the FPPC for misleading voters.”

Levine has in fact only been fined once by the FPPC. In 2019, Levine was fined $4,500 in connection with a $50,000 donation in 2014 to a ballot issue committee he created. The donation exceeded the maximum legal amount and was not reported by the legal deadline.

Levine’s campaign dismissed Swanson’s accusation in a statement. Campaign spokesperson Noah Finneburgh said:

It’s laughable that the Lara campaign would refer to a minor issue from eight years ago where we accidentally made two reporting errors to distract from Ricardo Lara’s well-documented history of promising not to take insurance money, then taking it, and then intervening on behalf of his donors, as well as these new revelations that appear to constitute money laundering.