The California Department of Insurance has spent much of 2026 approving rate increases for homeowners and auto insurers under Commissioner Ricardo Lara’s Sustainable Insurance Strategy. A lawsuit filed by the department’s former chief administrative law judge now alleges that the approval process behind some of those increases bypassed the independent judicial oversight that state law requires.
Kristin Rosi, who served as the department's top administrative judge from 2016 until her firing in 2025, filed the suit in Alameda County Superior Court in late September 2026. The case was first reported by CalMatters. Rosi alleges that Lara and his former special counsel Lucy Wang pressured her to change rulings she had made consistent with California law, and fired her when she refused. The California Department of Insurance declined to comment on the lawsuit.
The dispute traces to October 2024, when Rosi ruled that the department was approving insurance rate increases through negotiated settlements without subjecting those settlements to ALJ review. She concluded that review was required under Proposition 103, the 1988 ballot measure governing how California insurance rates are set.
Under Proposition 103, rate increases require prior approval from the department. When a consumer group formally requests a hearing on a proposed increase, the department is required to hold one before approving the rate.
Rosi’s ruling concluded that those settlements still required independent judicial sign-off to confirm they were fair. The insurance industry pushed back. Lara partially vacated her ruling, citing a filing from the department’s Rate Enforcement Bureau that argued Rosi’s decision contained legal errors.
The lawsuit alleges that after the ruling, Wang and other senior officials began limiting what cases the Administrative Hearing Bureau could take up at all, and that Lara emailed Rosi directly, asking her to “get on board” with a plan under which judges could only review settlements in rate proceedings once a formal notice of hearing had already been issued.
The complaints Rosi also filed with the California State Bar against Wang and three other department officials allege a more specific procedural breach: that Wang and, in at least one instance, Lara met with the department’s legal team about cases pending before those same lawyers, without including all parties such as insurers and intervenors.
In a court proceeding, that would be treated as improper ex parte communication. Those State Bar cases remain pending and have not been made public, but CalMatters obtained and reviewed copies of the complaints.
Wang now works for a San Francisco law firm representing insurance companies. She told CalMatters she could not comment on the litigation, as she was being represented by the attorney general’s office in her official capacity. The attorney general’s office deferred to the Insurance Department.
The Administrative Hearing Bureau now has one judge. That judge, in a ruling in August 2026, alluded to an understaffed and underresourced judicial branch. Dave Jones, Lara’s predecessor as commissioner and the official who appointed Rosi, called the allegations in the lawsuit “shocking and disturbing,” telling CalMatters the commissioner is supposed to be walled off from the rest of the department when a matter comes before him as final decision-maker.
The question of how California rates are reviewed has direct consequences for the brokers placing business in the state’s already-stressed property market. Proposition 103 was designed to protect consumers from insurer excess, but its rate approval requirements have also been structurally incapable of providing the rapid, market-responsive adjustments that rising wildfire risk demands.
The settlements Rosi objected to were the mechanism that allowed the department to approve increases, including double-digit homeowners rate increases for several of the state's largest carriers, without the delays that full public hearings historically entailed. If those settlements were reached through a process that bypassed required judicial review, as Rosi alleges, the rates their clients are now paying were set through a process that may not have met the standard Proposition 103 intended.
Jane Kim, who declared victory in the November 3 election to succeed Lara after her opponent conceded, said through a spokesperson that she plans to investigate Rosi’s claims as soon as she takes office in January. The first case management conference in the lawsuit is scheduled for February 16, 2027.
Robert Herrell, executive director of the Consumer Federation of California and a former deputy commissioner under Jones, told CalMatters he knew Rosi to be “smart, serious and well-respected.” He added: “An [administrative law judge] calls balls and strikes… they wanted the [insurance] industry to win almost all the time.”
The E&S market’s growth in California has been partly a function of the admitted market’s regulatory constraints, with carriers exiting or restricting coverage in high-risk areas while awaiting rate approvals. The Rosi lawsuit adds a new dimension to that story: not just whether rates are adequate, but whether the process that approved them had the independent oversight the law requires.
