The new evidence has come after California's Insurance Commissioner Ricardo Lara was scrutinised over a string of suspicious donations to his 2022 campaign

California's insurance commissioner Ricardo Lara speaking at ATMOsphere America 2018 Credit: (ATMO America)

Customer advocacy group Consumer Watchdog has amped up calls for California’s Insurance Commissioner Ricardo Lara to disclose communications with donors of his 2022 re-election campaign.

The increased pressure was prompted by new details that emerged yesterday suggesting Commissioner Lara involved himself in several legal cases on the side of Applied Underwriters – a Berkshire Hathaway company awaiting a sale to insurance tycoon Steven Menzies.

The new evidence comes after allegations that he received donations from four individuals connected to insurance providers controlled by Mr Menzies, totalling $54,300 – despite a 2018 pledge not to accept any financial contributions from the industry.

Commissioner Lara has reportedly said he will return the funds, which were donated legally, and claimed he received them as a result of a clerical error.


Commissioner Lara suspected of foul play over donations

Consumer Watchdog initially suspected the donations were made to grease to wheels of Mr Menzies acquisition of Applied Underwriters, which needs the go-ahead from Commissioner Lara – but in light of the new details, it now suspects more serious intervention has taken place.

commissioner lara donors
Jerry Flanagan (Credit: Consumer Watchdog)

It has filed a Public Records Act request – a tool backed by state law that allows the public to request the disclosure of governmental records – in a bid to force Commissioner Lara to release the details of each donor contract.

If he fails to comply by the end of this month, the group said this “raises the spectre of political corruption”.

Jerry Flanagan, litigation director for Consumer Watchdog, said: “Commissioner Lara should disclose his communications with Applied Underwriters so the public has a clear view of what really happened.”

He called it “extraordinary” for a commissioner to step in on the side of a donor to overrule a judge and then prompt the to judge say “pound sand” – a phrase used in American English meaning ”go away”.


Allegations of Commissioner Lara’s interventions in favour of donors

The campaign contributions to Commissioner Lara were made in mid-April following rulings against Applied Underwriting.

Consumer Watchdog initially suspected the donations were made to grease to wheels of Mr Menzies acquisition of Applied Underwriters, which needs the go ahead from Commissioner Lara – but in light of the new evidence, it now suspects a more serious motive.

Consumer Watchdog alleges that in at least four separate cases – including one involving Applied Underwriters subsidiary California Insurance Co – following initial adverse decisions by administrative law judges, Commissioner Lara intervened on the side of Mr Menzies’ companies.

San Diego Tribune investigative reporter Jeff McDonald discovered last week that Commissioner Lara overruled two decisions by judges in California’s Department of Insurance, as well as ordering the reopening of cases involving Applied Underwriters.

The commissioner also suspended two cases that challenged the cost of workers’ compensation policies sold by Applied Underwriters – which have come under fire from the State of New York this month.


Applied Underwriters settles $3m legal challenge against its workers’ compensation product

Last week, Applied Underwriters settled a legal case against the State of New York’s Department of Financial Services (DFS) over alleged claims it was selling an unapproved reinsurance agreement in a bundle with its workers’ compensation cover.

The state department raised concerns over the product in 2016, and despite settling the case, Applied Underwriters said it agreed to the settlement in order to end the “long and costly contention over the product” – but that it does not admit any wrongdoing.

commissioner lara donors

An additional complaint from the DFS was that the formula used to calculate the reinsurance cost of the workers’ compensation policy was “complex, and the way it was presented to employers was misleading”, which it believes led to some New York firms overpaying for it.

In its defence, the firm said it obtained the patent for its reinsurance formula from the DFS in 2011.

Applied Underwriters came under fire from the California Department of Insurance in 2017 for the same practices, which former Commissioner Dave Jones referred to as “bait and switch marketing tactics”.