California Commissioner Issues Final Regulation to Expand Insurance Access

Just before the end of the year, California Insurance Commissioner Ricardo Lara issued the final step of his insurance reforming, Sustainable Insurance Strategy. Lara’s news release on the last regulation calls the Net Cost of Reinsurance in Ratemaking Regulation, “historic.”

Boiling it down, the Net Cost of Reinsurance in Ratemaking Regulation basically forces insurance companies to increase homeowners coverage in high-risk areas. It also limits the costs that insurers can pass on to consumers.

Lara says the final piece works hand-in-hand with the other reforms he’s done to improve insurance coverage options for California consumers.

“Californians deserve a reliable insurance market that doesn’t retreat from communities most vulnerable to wildfires and climate change,” Lara said. “This is a historic moment for California. My Sustainable Insurance Strategy is focused on addressing the challenges we face today and building a resilient insurance market for the future. With input from thousands of residents throughout California, this reform balances protecting consumers with the need to strengthen our market against climate risks.”

What this basically does is make insurance companies increase coverage in wildfire-prone areas and requires them to write policies for at least 85% of their marketshare. To get there, companies will be required to increase that number by 5% each year until they get to the marketshare threshold. 

Lara says all parts of his reforms will make California open for insurance business again and will get insurers to come back into the state.

To do that, the commissioner’s reforms will give insurers a faster rate approval process, will put forward-thinking catastrophe modeling in place, add much-needed reforms into place for the California FAIR Plan and — the final piece released late last year — will allow insurers to factor reinsurance costs into their requests for rate hikes.

Source link: California Department of Insurance — https://bit.ly/4jhU2rg