Letter to the Editor — California’s Insurance Mess

California agency owner, Tony Verreos of VERREOS Insurance Agency in Brisbane, California sent Weekly Industry News a letter. His concern, the growing number of insurers leaving California’s homeowners insurance market.

Verreos’ comments centered on a letter sent to California Insurance Commissioner Ricardo Lara from several senators from the California Senate and comments from Senate Minority Leader Brian Jones. The criticism of the letter centered on insurance reforming Proposition 103 and Lara.

Proposition 103 gave California’s insurance commissioner the power to set rates. The letter criticized Lara for using that power to grant needed homeowners rate increases and the Legislature for doing nothing while the homeowners insurance market continues to implode.

“While the Legislature has failed to act, YOU have the power to begin solving the problem under your current authority. Everyone knows the hard truths of what has to happen: there need to be rate adjustments; reinsurance and prospective catastrophic modeling need to be authorized; the rate review process needs to be accelerated; insurance discounts for home-hardening must be authorized; we need to modernize the insurance market,” the letter demanded. “You can begin this process yourself, now. This is a critical Time for decisive leadership from California’s elected Insurance Commissioner and the department you head.”

Jones then added his own spin with a statement.

“California needs a healthy and stable homeowners’ insurance market that is accessible to all. Our current market is on the brink of collapse and Californians are struggling to find and purchase affordable homeowners’ insurance,” Jones said. “While the Legislature has failed to act, Insurance Commissioner Lara has the power to begin solving these problems under his current authority and we stand ready to work with him to fix this broken market.”

That’s the background that led Verreos to send his email to the Weekly Industry News editor. Here are his comments:

I just read about the Brian Jones public letter to Ricardo Lara, and here’s my take on it. The problems all go back to Prop103, but fast forwarding from 1988 30 years to 2018, all of the signs of trouble were clear. Insurers increasing reliance on AI, trouble with reinsurance markets, underwriting restrictions, cancellations, product withdrawals, and rate increases were all happening. 

Commissioner Lara did something maybe never done before, he held an open mic public forum as an all day opportunity for all parties to be heard on the pending Homeowners and Fire pricing and availability crisis. That was smart and good, unfortunately, he didn’t seem prepared with the solutions needed at that time, and since then has still not seemed to have discovered any! 

The one step the CDI took was a ban or moratorium on policy cancellations in post wildfire areas and not burned zip code areas adjacent to them. If I’ve unintentionally misstated or missed any of the facts, please chime in to correct me. Rather than seeking and finding ways to relieve the market pressures building up, the CDI seems to have just sat on their hands watching the market deteriorate during what has been so far one of the coolest summers in CA which has so far sparred us from the savage wildfires that seem to have eaten chunks of our state each year for the past ten plus. 

Is the letter to the CDI from Rep. Brian Jones going to do anything to move the needle? I doubt it. I wonder if any of the people involved at this point has a comprehensive idea of how we can fix this mess? I pray they do, but based on fifty-three years of past experience, I have no faith in any of them. 

As great and critical to people’s lives and the economy as the insurance industry is, it is equally devoid of strong leadership willing to go public with the truth about what California needs to do to heal a badly broken market. I wish the individual company Presidents would abandon the caution of their legal departments, and take on the consumer advocate role for a change, as the self appointed consumer advocates are either unwilling, or incapable of figuring out what makes a healthy market place, and the state seems to struggle over issues that they know will be politically unpopular. 

Sen. Brian Jones letter — https://bit.ly/44KWZI9

The quotes from the senators’ letter comes from California Globe.

Source link: California Globe — https://bit.ly/3LnfSu6

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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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