Around the PIA Western Alliance States – Week of April 3, 2023

California — Lara & the FAIR Plan: As part of his comprehensive effort to give more insurance options to California residents and businesses, Insurance Commissioner Ricardo Lara today announced the California FAIR Plan Association has agreed to more than double its existing commercial coverage limits to $20 million for businesses unable to find coverage in the normal insurance marketplace. The FAIR Plan is an association comprised of all insurers authorized to transact basic property insurance in California, and designed to be the state’s property “insurer of last resort,” writing coverage for businesses and residences when other insurance options are not available.

Commissioner Lara and the FAIR Plan have been working on this issue since the Commissioner’s investigatory hearing into the FAIR Plan last July where homeowners associations, youth recreational camps, agricultural groups, and other businesses spoke about the growing need for greater commercial coverage limits. Prior to Commissioner Lara taking office in 2019, the FAIR Plan’s commercial limits had not been adjusted in more than two decades to keep pace with increasing property values and coverage needs.

“Giving businesses greater options for insurance coverage is a top priority of mine. I am pleased the FAIR Plan is stepping up when insurance companies fall short in providing businesses and homeowners access to the coverage they need,” said Commissioner Lara. “I will continue working to expand coverage options and drive down the costs of insurance through wildfire safety discounts and increasing competition in the market.”

Today’s agreement signed by Commissioner Lara and FAIR Plan President Victoria Roach will increase the combined coverage limits for the FAIR Plan, under its Division I Commercial Property Program, from $8.4 million to $20 million per location and, under its Division II Businessowners Program, from $7.2 million to $20 million per location.

“The FAIR Plan is committed to strengthening consumer choice in the voluntary insurance market and ensuring all Californians have access to basic property coverage,” said Roach. “We appreciate Commissioner Lara’s leadership to take this step forward to address the challenges in the current commercial coverage market, while attempting to balance those challenges with the need for stability in the insurance market. We welcome the opportunity to continue collaborating with the Department of Insurance, the Legislature and other stakeholders to restore a viable insurance market for all Californians regardless of where they reside.”

State legislators joined Commissioner Lara’s call for an increased commercial coverage limit at the FAIR Plan in letters sent earlier this year.

“I applaud Insurance Commissioner Lara and the California FAIR Plan for working together to increase access to coverage for homeowners in high fire risk areas,” said Senate President pro Tempore Toni G. Atkins (D-San Diego). “Longer, more devastating fire seasons mean that Californians are feeling the impacts of climate change now. Expanding coverage is an important step towards preventing further displacement and protecting homeowners throughout the state. I look forward to continued conversations on how to make insurance more accessible for residents in high fire risk areas.”

“Consumers at risk of losing their homes need immediate relief. They cannot wait for long-term solutions to current insurance market challenges, in particular the impacts of climate change,” said Senator Susan Rubio (D-Baldwin Park). “At this moment, inaction is not an option. I commend Commissioner Lara for taking decisive action to protect consumers who are most at risk of losing protection. As Chair of the Senate Insurance Committee, I look forward to our continued collaboration and discussions with all stakeholders to identify viable long-term solutions for a healthy and stable insurance market.”

“This action to increase the California Fair Plan’s commercial coverage limit will improve access to fire insurance coverage for our businesses as well as multi-residential properties across our high fire risk areas,” said Senator Marie Alvarado-Gil (D-Jackson). “My constituents are directly impacted by the lack of available fire insurance coverage and I applaud the Insurance Commissioner and California Fair Plan leadership for working together to implement this necessary increase in the coverage limit. As a member of the Senate Committee in Insurance, I look forward to continuing to work with Commissioner Lara and my colleagues to deliver solutions to the fire insurance crisis impacting so many across Senate District 4 and our entire state.”

The new coverage limits will take effect after the FAIR Plan submits a new rule filing for approval by the Department of Insurance. The FAIR Plan has 60 days to submit a rule filing to the Department, with the goal of the Department approving these coverage limit increases, meaning coverage could be available in the fourth quarter.

Business groups welcomed the additional coverage.

“The increase in commercial coverage amounts provided by the FAIR Plan offers a much needed reprieve for the summer camps of California. Summer camps provide valuable opportunities for California’s youth but, in recent years, challenges to camps have been exacerbated by increasing costs for insurance coverage, and too often the coverage that was available came at too high a cost for these small businesses to afford,” said Mike Stillson, Chair of the California Collaboration for Youth. “This action by Commissioner Lara will provide the opportunity to properly insure our camps, buildings, and property moving forward, insuring our infrastructure in order to provide services to the youth of California. The California Collaboration for Youth thanks Commissioner Lara for once again working to help summer camps provide unforgettable experiences for the children of California.”

“This is a step forward in helping community associations find available, reliable, and affordable insurance coverage,” said Kieran Purcell, Chair of the Community Associations Institute California Legislative Action Committee. “We support Commissioner Lara’s continued efforts to promote wildfire safety measures while aggressively pushing insurance companies to write the coverage that our communities need.”

“California’s diverse farms need more than a one-size-fits-all solution for insurance,” said California Farm Bureau President Jamie Johansson. “Increased FAIR Plan coverage limits give farm families greater options and security to plan for the future. We thank Commissioner Lara for continuing to support our agricultural community.”

Since taking office, Commissioner Lara has prioritized increasing access to affordable insurance for California consumers and businesses. In October 2022, Commissioner Lara enforced the nation’s first Safer from Wildfires regulation requiring wildfire safety discounts for homes and businesses. In November 2021, Commissioner Lara ordered the FAIR Plan to increase its combined commercial coverage limits for the first time and, in November 2019, he ordered the FAIR Plan to increase its personal dwelling coverage limit to $3 million, doubling it from where it had been for two decades.

Source link: California Department of Insurance —

California — Commissioner Lara announces $1.5 million in refunds to homeowners overcharged for wildfire risk: As part of his ongoing effort to keep insurance prices fair, Insurance Commissioner Ricardo Lara announced today that Kemper Independence Insurance Company has issued over $1.5 million in refunds to thousands of California homeowners after the Department of Insurance found the company overcharged policyholders for wildfire risk. Kemper and its affiliate insurance company, Unitrin Auto and Home Insurance Company, have also agreed to a combined penalty of $617,200 to the state’s General Fund as part of the settlement.

At issue were the companies’ use of wildfire risk scores to establish the price that policyholders paid for insurance. In 2015, the companies introduced new wildfire surcharges based on the property’s Fireline wildfire risk score. Properties with a higher Fireline score paid higher premiums.

The companies changed the pricing system in 2018 without the Department’s knowledge or approval as required by law, resulting in thousands of policyholders being overcharged for insurance.

Since then Commissioner Lara has enforced a new wildfire safety regulation requiring insurance companies to provide policyholders with their property’s risk score and the factors behind it, including a right of appeal for consumers that have hardened their home against wildfire. The Commissioner’s new regulation will also require insurance companies to offer wildfire safety discounts based on the new Safer from Wildfires framework created with other state emergency preparedness agencies. He created this regulation after meeting with thousands of Californians across the state after taking office in 2019.

“Fair pricing of insurance is a fundamental part of California’s consumer protection laws,” said Commissioner Lara. “My actions are aimed at making Californians safer from wildfires while protecting them from excessive costs.”

The companies have reported that 2,402 Kemper homeowners were impacted by the unapproved surcharges and some of those policyholders were overcharged over successive policy terms. Kemper has now refunded all of the overcharges with 10 percent interest compounded annually for a total refund amount of $1,589,113. No Unitrin policyholders were overcharged. As part of the agreed penalty, Kemper is to pay $542,200, and Unitrin is to pay $75,000.

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The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


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