California Commissioner’s Regulation Redo goes Public

California Insurance Commissioner Ricardo Lara calls his new regulations on insurance rates and catastrophe modeling a “first of its kind.” He’s introduced Sustainable Insurance Strategy to consumer groups and to insurers and now is reaching out a last time to the public for its comments.

The Office of Administrative Law has published the regulations on line and the public comment period will go until September 17th. The comments are expected to be positive since they were pretty much so in the first two public meetings.

Lara says these are the first meaningful reforms in over 30 years.

“Climate change is affecting every part of our lives, making insurance harder to find and more costly for those at the greatest risk. With climate-driven mega-fires burning across the state, it is clear that relying on decades-old regulations only hurts our ability to prepare for the future,” Lara said. “My strategy will help modernize our marketplace, restoring options for consumers while safeguarding the independent, transparent review of rate filings by my Department’s rate regulation experts.”

Under the reforms, the regulations will force insurers to write more policies in wildfire prone areas in exchange for higher rates.

Lara says the 30-year-old regulations from Proposition 103 are outdated and have led to insurance companies to leave the state, or to stop writing policies in wildfire prone areas which has driven more consumers to California’s now over-taxed insurer of last resort, the California FAIR Plan.

“Over the past several years, the state has put billions toward wildfire mitigation efforts and homeowners have made significant investments in home hardening,” Lara noted. “Under Prop. 103’s existing regulatory framework, this is not accounted for by our existing retrospective, past-focused models for ratemaking. We want consumers to reap the full benefits of these efforts through modern, forward-looking models on how rates are calculated.”

This is what the public notice said, “While using historical experience may have allowed insurers to accurately project losses in prior eras, insurers and others working in the insurance field note that the progression of increased risk of loss due to wildfire, extreme weather events, and other climate risks, now renders historical experience increasingly unsuitable to accurately project losses.”

The Department of Insurance will hold a virtual public hearing to take input on the proposed regulation on September 17, 2024, at 10AM/PT. Written comments can be submitted to CDIRegulations@insurance.ca.gov.

Source link: California Department of Insurance — https://bit.ly/3ApJHaz