Grover Beach’s Stacy Korsgaden pins insurance crisis on Proposition 103 in her bid for California Insurance Commissioner

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Licensed Grover Beach insurance agent Stacy Korsgaden is combining her political ambitions with her career roots by running for California Insurance Commissioner.

“People are suffering,” Korsgaden said. “I talk to people that have no house payment. All of a sudden, their home insurance is being canceled, and their costs are going up three, four, five times. Or people are trying to get into new homes and the only offering that they have is through the California FAIR Plan.”

With incumbent Insurance Commissioner Ricardo Lara terming out, Korsgaden is the only Republican so far who’s thrown her hat into the 2026 election ring. Former Los Angeles County state Sen. and California Black Caucus Vice Chair Steven Bradford and State Sen. Mike McGuire—both Democrats—are also running.

Korsgaden unsuccessfully ran for the SLO County 3rd District supervisor seat in 2020. She came under fire for attending the Jan. 6, 2021, rally in Washington, D.C., that preceded the insurrection at the U.S. Capitol. In 2022, Korsgaden lost both her second campaign for SLO County 3rd District supervisor and her race for Grover Beach mayor.

In February 2023, she sold her 35-year-old company, Stacy A. Korsgaden Insurance Agency with Farmers Insurance, to a different Farmers Insurance agent. Korsgaden told New Times that she acquired an additional license as a financial advisor after the sale and set up a firm called Coastal Wealth Financial.

Now she wants the insurance marketplace to be more competitive. The root of California’s current insurance crisis, according to her? Proposition 103.

“It had very good intentions,” Korsgaden said. “But the fact that the insurance market is collapsing and how we fix that is really looking at the economics and deciding what road California is going to go on. When Prop. 103 was voted in in ’88, I would call that a form of socialism because it was price control.”

Regulating things like personal automobile, dwelling fire, and earthquake insurance, the proposition intended to protect consumers from erratic insurance rates while encouraging marketplace competition and affordable insurance for Californians. It turned the insurance commissioner’s position from a governor-appointed role to an elected one.

The proposition also set up a regulatory “prior approval” system where the commissioner must approve a rate applied for by an insurer before it can implement new property and casualty insurance rates.

According to the state Department of Insurance, “thorough, impartial review” saved California residents billions of dollars in premiums while making sure the market stays strong enough to pay out claims when people need them.

California Department of Insurance data found that between 2020 and 2022, insurance companies declined to renew 2.8 million homeowner policies in the state.

Last year, USAA Casualty Insurance Co. implemented an average homeowners insurance rate increase of roughly 26 percent in California. Some saw rate hikes as high as 48.5 percent, according to Insurance Business. The New Republic reported in 2024 that California had the fourth-highest rate of nonrenewal in the country after Florida, Louisiana, and North Carolina.

With coverage options aggravated by the wildfires in Los Angeles neighborhoods, more people turned to the state-mandated, high-cost insurer of last resort—the California FAIR Plan.

In September 2021, according to FAIR Plan data, it had 240,123 total dwelling and commercial policies. That amount swelled to 610,179 by June 2025.

That month, the FAIR Plan’s total written premium was $1.8 billion—a 33 percent increase since September 2024 and a 315 percent increase since September 2021.

“That [LA County] fire solidified my anger, my disappointment in the insurance system, in Prop. 103, in our career politicians, in our one-party rule in California,” Korsgaden said.

Korsgaden claimed that the proposition suppressed insurance rates and contributed to insurance companies leaving California.

“If State Farm says that they need to increase their rates by 30 percent, I want to see 10 new innovative startup insurance companies that are using AI that are going to provide you a policy possibly at a cheaper price point, more coverage, better service,” she said. “We cannot do that through government control.”

She added that if she becomes insurance commissioner, she’d work with the Legislature to devise a tax write-off or incentive that would lower taxes for a phase-out period of five years until the market stabilizes.

“I haven’t worked this out, but I’m saying that if we have a suppressed rate, and all of a sudden the true rate is 20 percent higher, my concern is for the public that wants insurance,” Korsgaden said.

She isn’t alone in her criticism. In July, the Western Insurance Agents Association gathered in Sacramento for a discussion hosted by Oakland-based Independent Institute. They floated the idea of a ballot initiative to change Proposition 103, according to ABC 10.

“The only way it can be done is if the insurance industry asks the voters to do it, and personally, I think that’s a hilarious idea,” proposition author Harvey Rosenfield told New Times. “We’re working on an initiative that could actually solve the problem they’ve created that 103 doesn’t really address, which is these shortages in the homeowners market in which the insurance companies have manipulated the FAIR Plan.”

Rosenfield, who is also the founder of Consumer Watchdog, added that Korsgaden is misinformed.

“She’s got a financial incentive because of her occupation to deregulate the insurance industry,” he said. “Under Prop. 103, an insurance company is entitled to increase rates as much as it can show it needs, and it’s entitled to not only a fair profit but coverage for its reasonable expenses, … losses in the future. Companies have been claiming they’re broke ever since Prop. 103 passed. … For homeowners insurance, California has been more profitable than the rest of the country over the long term.”

Rosenfield also pointed to current Commissioner Lara approving rate hikes for the insurance industry that’s “a little more than he’s authorized to give without violating Prop. 103.”

Lara came under public scrutiny after the Department of Insurance approved a $1 billion assessment on the FAIR Plan, which splits the cost of paying out claims related to the LA wildfires between residents and private insurers.

During his testimony at the state Capitol in March, the commissioner told lawmakers he couldn’t give them a specific amount on how much ratepayers would pay. He also said he would approve State Farm’s emergency rate hike request of 22 percent if the company could meet certain conditions.

Rosenfield’s Consumer Watchdog—which intervenes in the rate request process—submitted letters to Lara objecting to the State Farm approval, alleging that the company actually wanted to protect its Wall Street credit rating.

Whoever becomes insurance commissioner next, Rosenfield said, would have to fix “a lot” of Lara’s policies.

“If you can think of an industry that should have known climate change was happening, it would have been the insurance industry, but they did nothing for decades,” he said. “The next [person] … will have to take a look at climate change and figure out a good program for the state of California.”

Korsgaden, too, has the environment on her mind as she prepares for her state campaign.

“We need people that are going to be held accountable for the water, the forest, the homelessness, … all of that is insurable risk,” she said. “What California needs is not diversity of skin color, sexual orientation, or any of that. What we need is diversity of thought, ability, and talents.” Δ

Reach Staff Writer Bulbul Rajagopal at brajagopal@newtimesslo.com.

This article appears in Aug 14-24, 2025.