As most of you know, insurance companies are abandoning the California’s homeowners insurance market in droves. State Farm, Farmers and several others have stopped writing new policies with the intention of being out of the state by the end of 2024.
California Insurance Commissioner Ricardo Lara wants to stop the bleeding and is pushing for some serious insurance reforms. He calls the plan the Sustainable Insurance Strategy and it allows insurers more leeway in setting rates in high risk wildfire areas.
In return insurance companies must move back into wildfire prone areas. Under Lara’s plan — for example — if a company insures 20 out of 100 homes in the state, 17 of them must be in a wildfire prone area.
Some Democrats in California’s congressional delegation — 32 of them — aren’t pleased with Lara’s solution. They sent the commissioner a letter worrying that his reforms might weaken the consumer protections given to him by Proposition 103 and that his plan undermines the regulatory authority given to the commissioner by Prop 103.
Leading the charge is former California insurance commissioner, Rep. John Garamendi. He and Rep. Zoe Lofgren are the main authors of the letter. In their letter, the 32 representatives said Lara’s plan suggests “dramatic changes to the commissioner’s regulatory power that may result in a diminution of the authority granted by California voters and your ability to create a stable insurance market in our state.”
Proposition 103 was put into place by the voters in 1988. It made California’s insurance commissioner an elected position and required insurers to go through that position if they want to raise rates.
“We bring our concerns to your attention in anticipation of a comprehensive and transparent process of rulemaking, public hearings, and public comment on any proposed changes to the regulatory powers of the commissioner and process for approving any rate increases for policyholders,” the letter said. “Such a public process is necessary for the protection of consumers against unchecked corporate interests, and we strongly believe that any precipitous action should be subject to public scrutiny.”
Consumer Watchdog’s CEO — and the author of Proposition 103 — is Harvey Rosenfield. He, too, worries about Sustainable Insurance Strategy and says it lacks consumer benefits and has way too many loopholes.
Source link: Insurance Business America — https://bit.ly/3SGCWs1
The federal government’s budget deficit jumped to $1.7 trillion in the budget year that ended Sept. 30, up from $1.38 trillion the previous year. Analysts have warned that with interest rates heading higher, interest costs on the national debt will eat up a rising share of tax revenue.
Separately, congressional lawmakers left Washington for the weekend without a plan to avoid a potential government shutdown that could occur by Nov. 17. Moody’s cited congressional dysfunction as one reason it lowered its outlook on U.S. debt.
“Recently, multiple events have illustrated the depth of political divisions in the U.S.: Renewed debt limit brinkmanship, the first ouster of a House Speaker in U.S. history, prolonged inability of Congress to select a new House Speaker, and increased threats of another partial government shutdown,” Moody’s said.
Source link: Associated Press — https://bit.ly/3FVg8xj