California lawmakers are slated to hold a series of hearings this fall as the state attempts to avoid a collapse of its homeowners insurance market. Major insurance companies including State Farm, Allstate and Farmers have either stopped selling new policies or are limiting them in California, pointing to increased financial risk after devastating wildfire seasons coupled with rising inflation. “This is an incredibly urgent issue,” California Assembly Speaker Robert Rivas told reporters on the Legislature’s final night to pass new laws. Key stakeholders were unable to reach a last-minute deal to salvage the market ahead of the deadline. Rivas announced the effort to hold the hearings statewide in order to get community members involved. Exact details including the location and dates of the hearings had yet to be released as of Tuesday night. “We wanted an ironclad guarantee that consumers would be protected in any type of legislative effort,” Rivas said. Senate Pro Tempore Toni Atkins said policymakers need to hear from the public. “I think we’ve got a lot of work to do with the community on what the issues are,” Atkins told reporters. “We spent time talking to economists. It isn’t just a California problem. How do you spread risk across all pools of people affected and fairly have people get the policies needed and share the costs?” Meanwhile, Gov. Gavin Newsom has said his administration is exploring its own strategies but was not ready to share the details as of last week, including whether he would call a special legislative session or executive order. He acknowledged the importance of addressing the issue soon. “This is a fast-moving not slow-moving — issue. People are being dropped every single day,” Newsom said, who noted his own home is under the state’s FAIR plan, which provides coverage to high-risk properties when private insurers won’t. In a statement Tuesday, California Insurance Commissioner Ricardo Lara said in part, “There is no doubt our planet, country and state are at an insurance crossroads. Our current path is unsustainable. In California, our ongoing partnership with the governor and Legislature is critical to improving conditions for the consumers, homeowners and businesses that make up our insurance marketplace.””We also are moving forward with a package of regulatory solutions that will streamline the Department’s rate review process, opening it equitably to public input — not just the entrenched interests that have benefited materially from the status quo,” Lara said. As lawmakers prepare to publicly dissect the problem, the insurance industry has multiple requests, chief among them the ability to have proper tools to predict risk to accurately price policies. That includes the ability to use catastrophe modeling and the cost of reinsurance when factoring rates. “Insurance companies want to write in California. California is a good state,” said Mark Sektnan, vice president of the American Property Casualty Insurance Association. “Once you have the ability to predict the risk and price it, then insurers will be encouraged.” Jamie Court with the consumer advocacy group Consumer Watchdog said he had little confidence in the effectiveness of legislative hearings. He said lawmakers need to seriously consider a proposal that would require insurers to provide policies to those who harden their homes against wildfires. “Having hearings around the state where the insurance companies go and talk about their issues isn’t going to solve the problem,” Court said. “Paying whatever ransom the insurance companies want isn’t going to solve the problem either.”
California lawmakers are slated to hold a series of hearings this fall as the state attempts to avoid a collapse of its homeowners insurance market.
Major insurance companies including State Farm, Allstate and Farmers have either stopped selling new policies or are limiting them in California, pointing to increased financial risk after devastating wildfire seasons coupled with rising inflation.
“This is an incredibly urgent issue,” California Assembly Speaker Robert Rivas told reporters on the Legislature’s final night to pass new laws.
Key stakeholders were unable to reach a last-minute deal to salvage the market ahead of the deadline. Rivas announced the effort to hold the hearings statewide in order to get community members involved. Exact details including the location and dates of the hearings had yet to be released as of Tuesday night.
“We wanted an ironclad guarantee that consumers would be protected in any type of legislative effort,” Rivas said.
Senate Pro Tempore Toni Atkins said policymakers need to hear from the public.
“I think we’ve got a lot of work to do with the community on what the issues are,” Atkins told reporters. “We spent time talking to economists. It isn’t just a California problem. How do you spread risk across all pools of people affected and fairly have people get the policies needed and share the costs?”
Meanwhile, Gov. Gavin Newsom has said his administration is exploring its own strategies but was not ready to share the details as of last week, including whether he would call a special legislative session or executive order. He acknowledged the importance of addressing the issue soon.
“This is a fast-moving not slow-moving — issue. People are being dropped every single day,” Newsom said, who noted his own home is under the state’s FAIR plan, which provides coverage to high-risk properties when private insurers won’t.
In a statement Tuesday, California Insurance Commissioner Ricardo Lara said in part, “There is no doubt our planet, country and state are at an insurance crossroads. Our current path is unsustainable. In California, our ongoing partnership with the governor and Legislature is critical to improving conditions for the consumers, homeowners and businesses that make up our insurance marketplace.”
“We also are moving forward with a package of regulatory solutions that will streamline the Department’s rate review process, opening it equitably to public input — not just the entrenched interests that have benefited materially from the status quo,” Lara said.
As lawmakers prepare to publicly dissect the problem, the insurance industry has multiple requests, chief among them the ability to have proper tools to predict risk to accurately price policies. That includes the ability to use catastrophe modeling and the cost of reinsurance when factoring rates.
“Insurance companies want to write in California. California is a good state,” said Mark Sektnan, vice president of the American Property Casualty Insurance Association. “Once you have the ability to predict the risk and price it, then insurers will be encouraged.”
Jamie Court with the consumer advocacy group Consumer Watchdog said he had little confidence in the effectiveness of legislative hearings. He said lawmakers need to seriously consider a proposal that would require insurers to provide policies to those who harden their homes against wildfires.
“Having hearings around the state where the insurance companies go and talk about their issues isn’t going to solve the problem,” Court said. “Paying whatever ransom the insurance companies want isn’t going to solve the problem either.”
