With major insurance companies — State Farm, Allstate, Farmers, etc. — leaving the homeowners market in California, some members of the California Legislature had plans in the just ended session to help solve the crisis.
Lots of talk. No action on a bill that will lead to a resolution.
Insurance groups like the American Property Casualty Insurance Association (APCIA) were disappointed. Consumer groups considered anything being planned as a sellout to big business insurers and feared any solution would lead to extremely higher rates for consumers.
Denni Ritter of the APCIA put things in perspective.
“California’s decades-old regulatory system is outdated and in need of modernization to handle the increasing catastrophic losses resulting from inflation, climate change, and extreme weather,” Ritter said and noted that the state needs a “more efficient regulatory approval process to ensure there are enough resources in the system to cover consumer claims.”
One of the problems is voter passed Proposition 103 that rolled back rates 20 years ago and gave more rate increasing power to the office of the insurance commissioner. And the current commissioner, Ricardo Lara has been slow to respond to rate raising requests by insurers which helped lead to the mass exodus by insurance companies.
Republicans in California’s Senate sent a letter to Lara want him to get moving — and quickly.
“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. You can begin this process yourself, now,” the letter said.
Lara recently noted that he is moving and does have a plan.
“We also are moving forward with a package of regulatory solutions that will streamline the rate review process, opening it equitably to public input — not just the entrenched interests that have benefited materially from the status quo,” he said.
That’s a statement that, no doubt, worries insurance companies who are battling how to insure homes and businesses in a wildfire-prone state and very high construction costs.
And with that said, the commissioner added, “We will continue moving forward. Together, we can create a sustainable and resilient insurance market to protect Californians, our communities, and our environment.”
Source link: Insurance Business America — https://bit.ly/3PK0336
Source link: Insurance Business America — https://bit.ly/3riT1sD
