The depth of California’s homeowners insurance crisis is well-known. Among the reasons insurers are abandoning the state include the restrictive rate increase policies of the insurance department, the high cost of home repair and wildfire and earthquake risks.
Even though California Insurance Commissioner Ricardo Lara is pushing hard for reforms, it will likely take awhile before insurers come around. As a result, many homeowners unable to find an insurer are going to the last resort, California’s FAIR Plan.
To date 3% of the state’s homeowners are on the plan. But, according to Phil Irwin, the president of Gold Insurance Solutions, that number is growing significantly by the day.
“In the last 60 days, I think the application volume is around 1,000 applications a day right now, which is just astronomical,” he said. “It’s rough. We’re seeing policies in Downtown Sacramento that would have no reason to be on the FAIR Plan in a healthy market.”
Whether the number quoted by Irwin is factual is up for debate. What isn’t is what the state’s most expensive insurer is doing with rates. The FAIR Plan — like other California insurers — is also trying to keep rates actuarily sound.
Renewals for next year will soon be sent out and homeowners on the FAIR Plan can expect an increase pushing 15%. How close the increase gets to that number will depend on the property’s wildfire exposure.
Source link: The San Francisco Standard — https://bit.ly/3Q9Xg27
