Scott Shafer: Follow the bouncing ball.
Marisa Lagos: So what are they running for?
Scott Shafer: Yeah, exactly. Well, of course, DeSantis is trying to run for president. He’s have been struggling. Newsom insists he’s not running for president and he’s not.
Marisa Lagos: Insists insists insists insists
Scott Shafer: Yeah, he has subzero interest in that. But, he of course, has been raising his national profile, international profile, really with a trip to China and Israel. And so, yeah, he’s he’s been egging on, he’s been trolling DeSantis, along with Texas Governor Greg Abbott for months now. And they finally agreed to debate tonight on Fox with Sean Hannity, who apparently is buddies with Gavin Newsom now.
Marisa Lagos: Bromance, I believe, is the correct
Scott Shafer: Yeah. Bromance
Marisa Lagos: Bromance, frenemies?
Scott Shafer: Yeah it’s a lot of testosterone I think in the room.
Marisa Lagos: Hey I went back and found the tweet where Newsom originally challenged Santos to this debate. It includes lines like, “clearly you’re struggling, distracted and busy playing politics with people’s lives. I’ll bring my hair gel. You bring your hairspray.” So can we expect to that level of intellectualism do you think at this debate?
Scott Shafer: I hope not. I mean, there are some very substantive differences between these guys and between California and Florida. You did a lot of reporting, Marisa, on Covid policy and how differently California and Florida dealt with it. Now, there’s also things that Newsom’s going to have to defend, like all the homeless in San, homelessness in California.
Marisa Lagos: Although there’s homelessness in Florida, too. Nobody talks about it.
Scott Shafer: Yeah, there there is for sure. But like all these things, it’s like they’re each going to come armed with their data. And we know that Governor Newsom loves data. He loves studies and statistics. And you can kind of get lost in that. It’s not necessarily the kind of thing that wins over an audience. And I think ultimately it’s really going to be what impression do people take away from these, you know, this confrontation? I don’t think anybody’s going to remember this, the substance of their the details of what they talked about. But it’s like, you know, DeSantis has not been the most likable on the campaign trail. A lot of people don’t like Gavin Newsom. But nonetheless, you know, he beat back a recall. And, you know, this isn’t really his audience. It’s Fox News. It’s not his base.
Marisa Lagos: But he loves that because he watches Fox News all the time, as we said. I mean, he’s been on with Hannity several times. They like to spar. He showed up at the GOP presidential debate to be in the spin room. I think it’s going to be fascinating to see. Hannity is promised to sort of like not do a lot, just kind of let them go at it. So we’ll see how that works out. That could be bad if they’re just like crosstalk over each other. But yeah, I think to your point, I mean, one of the analysts I spoke with about this is Selena Zito. She writes for The Washington Examiner and the Pittsburgh Post-Gazette. And she was like, you know, this is a rare debate where they could actually both kind of win in the sense that, like, they’re not talking to the same audiences. So I think as long as it doesn’t feel like a routing on either side, I think they both might sort of be able to sort of claim victory. And, you know, in Newsome’s case, as someone else pointed out to me, he gets to talk to an audience that he doesn’t always and that in itself is a win for him because he is trying to spread the good word of Gavin Newsom far and wide. For whenever he runs.
Scott Shafer: I think he gets points as Pete Buttigieg does when he goes on Fox just for being there, because it is known as a kind of a very hostile to Democrats kind of environment. And so, you know, we’ll see how that goes. And, you know, Marissa, you and I saw him up close debating Brian Dahle in the gubernatorial election last year.
Marisa Lagos: Saw? We moderated it.
Scott Shafer: We moderated it. Yeah, we did. And, you know, we remember, I think, how aggressive Newsom was in that debate
Marisa Lagos: Better than I expected, honestly.
Scott Shafer: Better and more aggressive than I thought he would be. I’m using that hand thing that he does and Bill Clinton does. Sorry. But yeah, so I think we’ll expect I would expect to see more of that tonight. And what I hope is that it’s not just a bunch of screaming over each other that people actually get to hear what they’re saying.
Marisa Lagos: Yeah, like makes a case. Why is your six week abortion ban better than California’s very, you know, liberal, so to speak, abortion, like, let’s get into it. Why the Don’t Say Gay versus like the way that we’ve handled LGBT rights here? I mean, these are serious issues that impact people’s lives. And, you know, this is an opportunity. We’ll have to see. All right. Before we go to a break, Scott, big news dropped just before the Thanksgiving holiday. The assembly speaker, Robert Rivas, who just took over, is has named a bunch of new committee assignments. This is the game of musical chairs, kingmaker himself. What do we know?
Scott Shafer: Yeah, well, you know, as the expression goes, to the winner go the spoils. And so he’s getting to reward some of his big allies and some of the bigger moves that he made. Assemblymember Cecilia Aguiar-Curry from Davis is going to be replacing Isaac Bryan, who was sort of Rivas’s top lieutenant in that contentious, you know, very long battle, very contentious battle that split the caucus to who would who was going to replace Anthony Rendon as the speaker. Bryan now takes over natural resources. And then Buffy Wicks here in the Bay Area gets a really plum assignment. She’ll be chair of a proposed appropriations. And, you know, both that and the Budget Committee, which is now going to be chaired by Jesse Gabriel, taking over from Phil Ting. Those are the real two, the real juice committees. And then just real quick, another change. You know, public safety, fentanyl has become a big issue and there’s going to be a change in the chair of that public safety committee, Reggie Jones Sawyer.
Marisa Lagos: No surprise there. I mean, he is running in L.A. for a local office. He had gotten a lot of flak. I mean, I don’t I think he had told me that he was he knew he would be replaced, essentially. And he and he was happy about it because he’s going to be running for this local office.
Scott Shafer: Although, he’s being replaced by a guy running for mayor of Sacramento. Kevin McCarty.
Marisa Lagos: Right so it’s not like you can’t walk and chew gum. I mean, look, all of these are pretty progressive Democrats. Still. There are going to be some differences. I think there’s some cheering of the NIMBY sort that this idea that the sort of further strengthens, because I, I don’t think you can say that there a bunch of NIMBYs in charge before. To your point, Buffy Wicks, one of Rivas’s sort of top lieutenants in the speaker battle, getting that plum position although you know that also means you’re going to have to be the bad guy when it or bad lady when it comes time.
Scott Shafer: She’s up for that.
Marisa Lagos: Yeah, I think she is. And I think that it I mean, it’s just I think these are the kinds of things that you’re like, okay, noted. You know, I think Isaac Bryan and him had kind of clashed because he had some, you know, designs on the leadership post as well. Yeah. But a lot of this is going to we’re going to have to wait and see what it actually means, you know?
Scott Shafer: Yeah. And I think the one one thing that is being noticed is that with Isaac Bryan leaving as sort of that inner circle for the speaker, there are now no Black members of the assembly who are really going to be among the top lieutenants for the new speaker. And there’s some consternation about that, although, you know, if you look at all the committee chairs, you know, it is a diverse group of folks.
Marisa Lagos: And it is interesting, I mean, because we’re also this is the first time in a very long time we don’t have a speaker from either L.A. or kind of Central Bay Area. Yeah. Rivas from Salinas is a much more sort of rural, different, just different vibe.
Scott Shafer: I think it’s yeah, I think those are parts of California that never really feel represented in Sacramento, whether it’s the Central Valley or the Central Coast. So yeah, I think it’ll be very interesting and he seems to be uniting the caucus in a way that it certainly wasn’t, you know, by the end of last summer.
Marisa Lagos: We’ll see.
Scott Shafer: Yeah, you will see.
Marisa Lagos: All right. We’re going to take a short break. When we come back, KQED science reporter Danielle Venton will join us to talk about her deep dive into the troubled home insurance market in California. You’re listening to Political Breakdown from KQED Public Radio.
Marisa Lagos: Welcome back to Political Breakdown. I’m Marisa Lagos here with Scott Shafer. We are thrilled to have on the show today Danielle Venton. She is a science reporter here at KQED and was part of the team who just put out a new season of the podcast, Sold Out: Rethinking Housing in America. This season is a six part look at the intersection of housing and climate change crises. Danielle, thanks for being here.
Danielle Venton: Thanks so much for having me.
Marisa Lagos: All right. Well, we want to get into the politics on what’s happening here, but I thought we’d start with the way you open your episode of the show, which is the story of a Santa Rosa man, Jason Majors. Tell us a little bit about what happened to him and kind of why you used him as a central character in this whole narrative.
Danielle Venton: Yeah, I mean, I thought he typified the insurance crisis in sort of an unexpected way. So he until recently lived in northwest Santa Rosa in a very fire prone area, steep canyons, thick forests, lots of lots of overgrown brush, and survived about half a dozen fires in about the last seven years. He survived the Tubbs, the Kincade, the Walbridge, the Hennessy and the Glass fires and his home —
Marisa Lagos: And his home’s standing?
Danielle Venton: And his home is still standing. But he’s had his insurance canceled about as many times. When I spoke to him this summer, he still had insurance, but he was trying to sell his home because unfortunately, he’s getting a divorce and that’s part of the deal.
Scott Shafer: Just so we understand, like did he survive all those fires by dumb luck or did he do things to make it more defensible?
Danielle Venton: He’s worked on his property a lot.
Marisa Lagos: He takes it real seriously.
Danielle Venton: Yeah. Yeah. He spends days clearing brush. He has a, you know, a roof that is ready for fires that has mesh over the vents. I mean, he he does all the things he can to be prepared for fires. But he had a terrible, terribly hard time trying to sell his property. He had to drop the price four times before he found a buyer. And one of the things his agent told him was that prospective buyers liked the house. They liked the area, but they couldn’t get insurance, at least insurance that they were happy with. And so it really it was eroding into his personal wealth and, you know, the money that he’d have to use to start this new phase of life.
Marisa Lagos: So this is, I mean, people I’m not going to lie Danielle, sometimes people get a little bored talking about insurance. Right. So, I mean, can you just kind of explain to us like what is the state of play here in California? When we talk about the insurance market, who are the key players when it comes to regulators, advocates? Like, how does the process work? I mean, obviously, we know as consumers, you buy a house, you got to get an insured. If you have a mortgage, you want to get it insured anyway because you don’t want something to happen. But like, how is what I pay regulated by the state? How does that all play out?
Danielle Venton: Absolutely. I mean, I think people think that insurance is boring. But I think it’s fascinating because it is our first line of defense against climate change for for most of us.
Marisa Lagos: And it’s basically betting. I mean, right? It’s gambling.
Danielle Venton: Yeah, totally. And it’s the it’s the thing that guarantees that, you know, if something bad happens to you, it doesn’t ruin your future life.
Scott Shafer: You know, at the same time, it’s like one of the few things you buy that you hope you never use.
Danielle Venton: True. Yeah. Yeah. You know, and the less often you have to use it, the healthier the whole market is. And people are using insurance too often right now. And that’s the source of the big problem. So, you know, what’s what’s the who are the players here? You have insurance companies who are, you know, placing bets basically with with their consumers about, you know, how risky their property is. You have the insurance commissioner, Ricardo Lara, who regulates the industry in the state. And then you have different consumer advocate groups who are trying to trying to look out for customers.
Scott Shafer: So let’s dig into one of those, and that’s the insurance commissioner. That position was created by the voters in 1988, Proposition 103. And at that time, the big issue was auto insurance. Obviously, a lot has changed since then. So, you know, as we’re talking now about home insurance, but what else is on his plate and how much power does he, Ricardo Lara, have to address this problem?
Danielle Venton: Yeah, Prop 103 in 1988 made that an elected position. It had been appointed by the governor prior to that. So it affected car insurance, italso affected home insurance, business insurance. And he has a lot of power to determine how companies can do business, do business in the state. People have different interpretations of how well he’s using that power, whether whether he is, you know, whether Prop 103 has been, whether the rules have been kind of written to strictly, you know, above and beyond the letter of the law.
Marisa Lagos: Can you tell us, like, what were the basics of 103? Like, what was besides creating this elected, you know, position? Like what what does it say?
Scott Shafer: And I would assume the idea of that was to insulate that person from what, politics? To make them independent, which is kind of ironic because they’re elected now.
Danielle Venton: Well, and now you could argue that it’s more subjected to populist winds because it is an elected position. So in the late ‘80s, car insurance in California was just increasing hand over fist. I mean, it was it was absurd. And so Prop 103 to start with, told insurance companies that they had to decrease their rates by 20%. But also that they couldn’t predict into the future how bad they thought risk was going to be. They had to use historical data to price risk. And that they couldn’t increase rates to much above about 7% without getting together all these documents, all this data going to the state and saying, hey, we want to raise our rates, you know, more than 7%. This is why you should let us. And the state would then take a look at that and say, yes you can, or no you can’t.
Marisa Lagos: So created similar regulation to what we have in the electricity market, for example.
Danielle Venton: Yeah, right. And then it also created a opportunity for the public to get involved and challenge those rate increases. And if if members of the public wanted to do that, they could apply for the costs of doing that to be to be reimbursed. And some consumer advocates like Consumer Watchdog have made about $10 Million over the last decade not made, but they have been reimbursed millions of dollars for their work in challenging rate increases.
Scott Shafer: You know, it’s hard to understand how auto insurance could suddenly be going up, up, up, up. Like people are becoming worse drivers. But in the case of
Marisa Lagos: I mean maybe they were.
Scott Shafer: Well, maybe they were. But like not to justify those kind of rate increases that trigger this, but with, in this case, climate change and wildfires are, in fact making it more expensive for insurance companies and homeowners to survive. And so they have a better case to make, don’t they, that maybe their rates should be based on something else that’s really reflects the conditions.
Marisa Lagos: Because things are changing, right? To your point about projections versus reflections, yeah.
Danielle Venton: I think everyone who’s lived through the last seven years in this state realized that realizes that the risk that we thought existed ten years ago is not the risk that we have today. If you grant that, then I think it’s reasonable to, you know, to accept that maybe we need to pay more for that risk to be insured. Insurance companies want to be able to look into the future. And so they’re called catastrophic models, catastrophe modeling. Which would, which incorporate climate change models and local conditions into kind of predicting how much a place is at risk of fire or floods.
Marisa Lagos: Yeah. So I guess, like what do you see as the politics here? Because it strikes me that an insurance commissioner, Ricardo Lara, needs to tackle this, but there’s also not a lot of like people like you don’t want to be the person overseeing huge increases in the market. Like, how do you see this kind of right now? It seems like nobody has really wanted to tackle it head on from the governor on down to the legislature and insurance commissioner. Do you think that’s fair?
Danielle Venton: I think that’s fair. I think tackling it is not going to be popular, and that’s —
Scott Shafer: Because rates will go up.
Danielle Venton: Because rates will go up. Now, let me let me say, you know, the devil’s advocate side of this. People’s rates going up maybe 20, 30% kind of across the state would mean paying a couple hundred dollars more a year for insurance. I don’t want to pay more. Like, I like having my insurance. You know, pretty reasonable. We should say, insurance in California cost quite a bit less than in other states with similar climate liabilities. I don’t want to pay more for insurance, but I also want to be able to sell my house.
Marisa Lagos: Right or buy a house.
Danielle Venton: It’s not the end of the world necessarily to pay a little bit more for insurance. It’s the end of the world if the insurance market continues to weaken and someday collapses. And the the path that we’re on right now, well I mean we are headed towards that.
Scott Shafer: How much could the governor do with an executive order or Ricardo Lara as insurance commissioner due unilaterally? I mean, to what extent can they address the problem on their own.
Danielle Venton: Through executive order, I don’t think the governor can do much. In September, he did issue an executive order asking for Ricardo Lara to take quick action on trying to stabilize the market. And two hours later, Ricardo Lara
Marisa Lagos: Almost as if they orchestrated the whole thing together!
Danielle Venton: Announced these big sets of changes. And some of these some of the things that he said would be considered are stuff that the insurance industry definitely wants. Like they want to be able to use catastrophic models, not just historical modeling. He said that they’d hire more staff to consider rate increases faster. But the big, you know, a big concession that he got from the insurance industry, which which shouldn’t be overlooked is that the insurance companies guaranteed that they would write, that they would cover 85% of homeowners in wildfire prone areas. These are the areas that insurance companies have been have been leaving kind of they’re sort of cherry picking who they want to insure so that they don’t have too much risk. And and that would be, you know, if 85% of homeowners can get good, fair market coverage in wildfire prone areas, that would take some of the risk off the public, sort of the public option. And, you know, that could be very good for stabilizing the market.
Marisa Lagos: If you’re just joining us, you’re listening to Political Breakdown from KQED Public Radio. I’m Marisa Lagos, here with Scott Shafer. We are talking with KQED science reporter Danielle Venton. We’re talking climate change, housing and insurance. All right. So the insurance commissioner is going down this regulatory route, not with a change in the law. Right? They’re trying to sort of restructure within the confines of Prop 103
Danielle Venton: Basically rewrite the rules of 103.
Marisa Lagos: The interpretation of 103. Which is controversial. Let’s talk about the pushback they’ve received. I know consumer watchdog you mentioned at the top is one of the biggest interveners. They’re one of the biggest groups in the state. They have reacted pretty angrily, I would say, to some of this. You know, we also saw a lot of pushback when there was an attempt in the legislature this summer to do some of this legislatively. And we’ve seen a bunch of members of Congress come out against it. What are they objecting to?
Danielle Venton: I mean, the if I just to say it bluntly, I think they want the past to still be the present. You know, they they there is a huge concern about rates going up. But it seems hard to figure out how you really fix this problem without rates going up. You can’t. You can’t wildfire safety your way out of the crisis we’re in right now.
Scott Shafer: So in other words, you’re saying it’s going to take some political courage. We’ve got an insurance commissioner who just got reelected. And I don’t know if there are term limits for insurance commissioner, but, you know, he’s not going to face the voters in any case until 2026. You’d think that would maybe help him get a stronger spine. Newsom can’t run for governor again, but he’s
Marisa Lagos: And we should say Lara’s been on the show. We’ve asked him about this. He’s gotten a lot of heat since he got elected in 2018 for essentially reneging on a campaign promise. He said he would take no money from insurance companies. Public campaign filings show that he has. He also got some heat for hanging out with insurance lobbyists and things like that. So, I mean, there’s some distrust here, right, with the consumer advocates and other folks.
Scott Shafer: And some justification for that.
Danielle Venton: Yeah, absolutely. But I have spoken with consumer advocates and in fact, John Garamendi, the congressman who penned the letter that was signed by by many, you know, a large portion of the congressional California congressional delegation.
Scott Shafer: Former insurance commissioner himself.
Danielle Venton: Yeah. And I was and he wrote this letter to Lara that said, you know, we we’re concerned with the steps that you’re taking and think that you should use your powers to to to take a closer look at basically the books of individual insurance companies. And I, I spoke with him yesterday. I really tried to push on, how do you think that more data is going to help him better regulate these companies? Don’t these companies kind of know their own bottom line and they’re deciding to leave? Seven of the top 12 insurance companies have left or are pulling back from the state. And I could not get a clear answer. It was a little bit bewildering. And unfortunately, he got pretty frustrated with me. I don’t understand. They don’t seem to make a concession that that interest the insurance industry regulation structure actually needs to change.
Scott Shafer: You know, we’re right in this moment where Newsom, the legislature, is very much in a yimby phase. You know, let’s build more housing. And I’m wondering, how does this problem of people not being able to get insurance in some parts of the state, how does that bump up against those priorities?
Danielle Venton: Oh, my goodness. This is an enormous problem. You know, developers, people who are going to build homes, they’re one of the people who want to buy insurance. If they can’t get insurance, they’re not going to build those homes. And that really threatens everything the state is trying to do to become more affordable, more equitable. I mean, housing is a problem that affects all other areas of of the state.
Marisa Lagos: What do we know about, you know, to Garamendi’s concerns and those of some of the consumer groups, like what do we know about insurance companies’ bottom lines? Like what do they have to tell us, you know, how much they make or tell Wall Street or whatever year after year?
Danielle Venton: I mean, we do get to we could do good indications of that. Insurance companies say that the catastrophic fires you fire years of 2017 and 2018 wiped out the previous 20 years of profits. I also spoke with an insurance industry analyst from the R Street Institute, and he says, you know, he his name is his last name is Theodorou. And he, you know, gives congressional testimony all the time and and is, you know, kind of a go to expert. People often ask him, hey, is the insurance industry just super greedy? And he went back and looked over a number of decades and found that while the S&P 500 over the last couple decades has gone up an average of 14% a year, insurance company profits, insurance companies make about 4% a year. You know, so. So they’re not making money hand over fist, like.
Marisa Lagos: They could still be greedy, but that’s, that’s a judgment call.
Scott Shafer: How much is enough? Yeah. But, you know, other states, of course, face similar climate change problems. Florida hurricanes, tornadoes, floods. You know, why are insurance companies not fleeing those states? Is it that the rate structure is just completely different and more beneficial to them?
Danielle Venton: Well, I mean, one thing to say is that people do pay more in other states like Louisiana, Texas, Florida that have big climate risks. Insurance companies are leaving Florida. Florida has enormous problems. They have really
Marisa Lagos: Them for the debate tonight.
Danielle Venton: Yeah, exactly. You know, they’re their version of sort of the what California has is a fair plan is like the insurer of last resort. Florida has a citizens insurance and it has its really undercapitalized, very shaky, enormous problems. So, you know, overall, there are some unique problems to California. But climate change is really upending the whole insurance industry model as we know it.
Marisa Lagos: So we have, on the one hand, the insurance commissioner rewriting these regulations. They will become public. There will be feedback. We will all hear the outcry, whatever they are. On the other hand, as I mentioned, the legislature tried and failed to get something over the finish line in the last few minutes. Like do you expect that to come back legislatively next year? And what what would they be tackling? Because as we know, a ballot measure has got to go back to the voters if you want to change them significantly.
Danielle Venton: Yeah, I think what’s on the table right now are just tweaks within the realm of, you know, Prop 103 and the idea of voters approving something that opponents can say, hey, this is going to make your rates skyrocket. I mean, it just seems like a just like
Marisa Lagos: Far cry?
Danielle Venton: Yeah.
Scott Shafer: You know, we started off this segment talking about Jason Majors, the man you met up in Santa Rosa, having a hard time selling his house because they can’t get insurance. I’m wondering, you know, to what extent, you know, can this be addressed by like communities deciding. Because there’s a line in your podcast about, you know, any home is only as safe as the least safe neighbor. So to what extent like do would it be helpful to have like a policy within a county or a neighborhood?
Marisa Lagos: Right something the government can help
Scott Shafer: Yeah. To enforce and say, hey, you’ve got to make this less fire prone.
Danielle Venton: It would be enormously helpful. One of the most promising solutions I learned about in reporting from my podcast was spearheaded by the by the climate officer of Sonoma County, and she was trying to hammer out this plan where a neighborhood where people are having a lot of trouble getting insurance would all meet a certain level of fire safety, and in exchange they would basically be guaranteed from insurance companies reliable, affordable insurance if certain standards were maintained. I think that’s a that’s a potentially promising model. It was getting off the ground. And then, you know, Allstate and State Farm all began leaving and it just put the whole thing on ice. There’s other ideas, too, of, you know, looking at kind of landscape level safety with bringing in insurance companies, fire authorities. That really kind of needs to be in addition to some increase of rates. Community level safety really needs to be the way of the future.
Marisa Lagos: Danielle Venton, she contributed to the podcast Sold Out: Rethinking Housing in America. You can find it wherever you get your podcasts. Thank you so much for coming in.
Scott Shafer: Thanks Danielle.
Danielle Venton: Thank you.
Marisa Lagos: That’s going to do it for this edition of Political Breakdown. We’re a production of KQED Public Radio.
Scott Shafer: Our engineer today is Christopher Beale. Our producer is Izzy Bloom. I’m Scott Shafer.
Marisa Lagos: And I’m Marisa Lagos. You can also find this podcast wherever you find your podcasts. We’ll see you next time. Hope insurance is sexy now.
