California employers are paying more for workers’ comp coverage even though rates are decreasing nationwide, courtesy of Insurance Commissioner Ricardo Lara.

However, the rate increase isn’t the only way Lara is contributing to financial pain in California.

A deep-dive investigation by 7 On Your Side reveals that Lara spent (at a minimum) tens of thousands of taxpayer dollars on luxury travel, hotels, and security. The trips, to everywhere from Bermuda to Dubai to Singapore, apparently have little discernible connection to Lara’s official duties.

California’s Fair Political Practices Commission is investigating Lara’s jet-setting, which coincides with frequent absences from official obligations, such as attending state insurance briefings.

California employers, outrage is appropriate. While spending taxpayer dollars on safaris, first-class tickets, and rooftop parties, Ricardo Lara is feeding your revenue to insurers that are hauling in record profits from workers’ comp.

Swanky Hotels, VIP Events, & Other Perks of Being Insurance Commissioner

7 On Your Side’s reporting on Lara’s travel spending is extensive, detailing largely taxpayer-funded trips to:

• Multiple European destinations, including France, Switzerland, Scotland, and Ireland
• Chile, Costa Rica, Uruguay, and Guatemala
• Japan and Singapore
• Egypt and Dubai
• Multiple U.S. locations
• Bermuda…on three separate occasions

Lara’s adventuring apparently left little time for pesky tasks like…showing up for work. According to the Professional Insurance Agents Western Alliance, Lara missed more than half of state insurance meetings while on trips since 2019.

Lara’s office has attempted to defend some of the Commissioner’s globe-trotting, noting, for example, that:

“Nearly 40% of the world's reinsurance companies are based in Bermuda, paying out trillions of dollars in claims.”

However, Lara’s office was able to provide a direct business purpose for just seven out of 48 trips for which 7 On Your Side requested details. Detailed records related to specific travel expenses for the trips are incomplete at best.

Where expense details exist, they do not suggest a committed state official executing his duties. For example, one trip included (emphases ours):

“...a five-star hotel stay in New York City for PrideFest that cost taxpayers more than $11,600. The four-day trip listed no insurance-related meetings on his calendar, but a VIP rooftop event with ‘DJ Kitty Glitter’ made the cut.”

While celebrating Pride is a worthy personal choice, the issue is that this taxpayer-funded trip included no documented business purpose related to Lara’s duties as Insurance Commissioner.

Lara’s Department of Insurance profile page champions the Commissioner’s pledge to “crack down on fraud, which continues to cost consumers and businesses millions of dollars.” While Lara remains in his official position, a crackdown on irony may also be in order.

California Employers Deserve Better

California’s problems don’t begin and end with Ricardo Lara. Clearly, the way the state handles insurance in general, and workers’ compensation in particular, is in need of profound reform.

Where data is available, the current state of workers’ comp paints a depressing picture:

• California workers’ comp claims take twice as long to resolve as the national median.
• California workers’ comp claims cost twice as much as the national median, costing $0.49 to deliver every $1 of benefits.
• The state fee schedule for provider reimbursement is among the lowest in the nation, even as employers’ rates for workers’ comp coverage increase.
• Employers’ rates for workers’ comp coverage are decreasing nationwide…but not in California.

Meanwhile, the California Division of Workers’ Compensation (CA DWC) openly violates the law, tacitly allows payer non-compliance, and fails to enforce workers’ comp laws and regulations even in the face of overwhelming evidence of illegal business practices.

The California workers’ comp system is failing, largely due to the state officials whom taxpayers entrust with managing it. Ricardo Lara may be the most obnoxious example, but he isn’t the only one.

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