Jane Kim Leads California Insurance Commissioner Race

Finishing first in the primary for state insurance commissioner, Jane Kim — who formerly sat on the San Francisco Board of Supervisors — is at the center of a race that typically flies under the radar, but carries implications for real estate developers and investors, along with homeowners.

The Palisades and Eaton fires put a spotlight on the role, as insurance shortfalls and payout delays have muddied the road to rebuilding. The average difference between property owners’ insurance payouts and what it would cost them to rebuild was $550,000 in Altadena and $1.2 million in the Palisades, according to a recent report from the nonprofit Department of Angels.

This has led to efforts from development firms, such as Genesis Builders, to find avenues for lowering the cost to rebuild, typically through offering pre-approved home plans and using the economies of scale by targeting groups of homeowners. Still, the state of insurance in California plays an important role in housing investment and homeownership.

Kim, who tallied 27 percent of the vote as of Wednesday, will face state Sen. Ben Allen in the November runoff. Allen earned about 19 percent of the vote.

Implementing public insurance programs is “the only solution to building a healthier market,” Kim told The Real Deal. She’s proposing a single-payer, state backed disaster insurance program that she said is inspired by practices in New Zealand. Homeowners would still obtain their regular home insurance from private companies. They would pay the insurance company a levy on disaster coverage, which the insurance provider would then give to the state, which would handle future disaster-related payouts.

Key to this plan is taking the funds the state receives, investing that into the bond market and using the earnings to finance fire safety initiatives such as fire-proofing older homes and upgrading infrastructure, Kim said.

Rather than insurance providers responding to the increased risk of wildfire by leaving California or raising premiums — as State Farm and Farmers Insurance Group have — Kim believes a public disaster model will keep costs lower for homeowners.

Despite an endorsement from progressive Sen. Bernie Sanders, Kim appears to have support from across the aisle, winning over multiple counties where former Fox News contributor Steve Hilton, a Republican, is leading in the gubernatorial race — including San Diego, Orange, Ventura, Butte and Merced counties.

Kim was among the candidates who received the most real estate money with only two of her 10 primary opponents raising more from the industry — neither of which made it past single-digits in vote percentages.

Kim secured close to $30,000 in contributions from industry players, based on a review of campaign finance data from the California Secretary of State. Donors included Wayne Jordan of Oakland-based Jordan Real Estate Investments, Lawrence Lui of Cresleigh Management and an associate from nonprofit developer EAH Housing.

Her opponent, Allen, whose state Senate district includes Pacific Palisades, brought in close to $12,000 from the industry. Notable donors included brokers from Sotheby’s, the Beverly Hills Estates and CBRE, Ardie Tavangarian of Arya Group, Shana Tavangarian, an agent at Carolwood Estates, and Thomas Safran of Thomas Safran & Associates.

Kim intends for her disaster program, which she named “Natural Disaster Insurance for All,” to be universal and guaranteed, but there’s a catch. She distinguished that the program should be guaranteed for current homeowners.

“We don’t want to incentivize developers to now go into these existing [high fire risk] zones that we are aware of and build, build, build, knowing that they’ll get some type of guaranteed insurance,” Kim said. “We have to have a real discussion about new development.”

Setting guidelines for new developments would involve bringing together “a big table of stakeholders that includes the real estate industry, insurance, neighborhood and community leaders, and the state of California,” she said.