This is an excellent article explaining the reasons behind the challenges of the market.
I would hope you could share this with the mainstream media. The challenge is that the commissioner only receives good press if he takes action against an insurer but receives no accountability when markets fall apart due to his actions restricting the market. Since his term expires soon, he really has no long-term interest in correcting the situation.
Lara is termed-out in 2024. He is only using this office as a stepping-stone to higher office, the way it’s been since the Ins. Comm. was switched from being appointed by the Governor to being elected, which was in the late 1980s-early 1990s; having the Governor appoint an Ins. Comm. would be a much better solution, as they would have to abide by the law, make rate decisions in a timely manner, not be allowed to use the CA FAIR Plan as the de facto way to allow carriers to cover Homeowners, and other duties of the Office. I went through this after the 1994 Northridge EQ caused a 2 1/2 year long Homeowners moratorium. I lobbied CA Sen. Pro Tempore Bill Lockyer for the CEA (along with his assistant, Nathan Barankin, Ernie Lopez, a State Farm Agent in Hayward/Castro Valley, & a female State Farm Claims Rep; I called the main CA P&C Ass’n. Leg. Chair upon arriving back at my office from Lockyer’s Hayward office, excitedly saying that we had Legislation to create the CEA), This was late 1996. Now we need a similar mechanism, such as the CEA, to similarly cover the Fire market in a more comprehensive, collectively shared way. Come on, all of you Agent Ass’n. and Carrier Leg. Reps, lobby the Legislature to do it the right way, from the floor of their Chamber in the Capitol; use the CEA’s funding mechanism as a template. That was only 27 years ago. We can reinvent the wheel and do it again.
I am not sure if we need to create another pool to cover the fire market. A better way is to allow the admitted market to adjust rates and coverage on a timely basis. The challenge for the admitted market is that those companies have constraints which non-admitted carriers do not have to worry. As a result, homeowners in many areas pay much more for less coverage through the non-admitted market.
A pool for mudslides following fire might be more appropriate if the department would change the previous mandate of forcing insurers to cover that risk. This would most likely make fire insurance more available to more customers.
I could live with that, a pool for mudslide. But that is dependent on a Commissioner who knows Insurance, who cares about the Insurance marketplace, and who is not beholden to political interests, who gives the rates needed to the carriers who are requesting it from him (or from her). Now we must wait until a new Commissioner is inaugurated in late 2026-early 2027 for those changes, which is too long. There must be a better path forward than just pulling out of the market (like most of the Homeowners carriers did in 1994, post-Northridge). I am confident we can get a solution together, however. Thanks for your great comment.
This is an excellent article explaining the reasons behind the challenges of the market.
I would hope you could share this with the mainstream media. The challenge is that the commissioner only receives good press if he takes action against an insurer but receives no accountability when markets fall apart due to his actions restricting the market. Since his term expires soon, he really has no long-term interest in correcting the situation.
Lara is termed-out in 2024. He is only using this office as a stepping-stone to higher office, the way it’s been since the Ins. Comm. was switched from being appointed by the Governor to being elected, which was in the late 1980s-early 1990s; having the Governor appoint an Ins. Comm. would be a much better solution, as they would have to abide by the law, make rate decisions in a timely manner, not be allowed to use the CA FAIR Plan as the de facto way to allow carriers to cover Homeowners, and other duties of the Office. I went through this after the 1994 Northridge EQ caused a 2 1/2 year long Homeowners moratorium. I lobbied CA Sen. Pro Tempore Bill Lockyer for the CEA (along with his assistant, Nathan Barankin, Ernie Lopez, a State Farm Agent in Hayward/Castro Valley, & a female State Farm Claims Rep; I called the main CA P&C Ass’n. Leg. Chair upon arriving back at my office from Lockyer’s Hayward office, excitedly saying that we had Legislation to create the CEA), This was late 1996. Now we need a similar mechanism, such as the CEA, to similarly cover the Fire market in a more comprehensive, collectively shared way. Come on, all of you Agent Ass’n. and Carrier Leg. Reps, lobby the Legislature to do it the right way, from the floor of their Chamber in the Capitol; use the CEA’s funding mechanism as a template. That was only 27 years ago. We can reinvent the wheel and do it again.
Hi SacFlood:
I am not sure if we need to create another pool to cover the fire market. A better way is to allow the admitted market to adjust rates and coverage on a timely basis. The challenge for the admitted market is that those companies have constraints which non-admitted carriers do not have to worry. As a result, homeowners in many areas pay much more for less coverage through the non-admitted market.
A pool for mudslides following fire might be more appropriate if the department would change the previous mandate of forcing insurers to cover that risk. This would most likely make fire insurance more available to more customers.
Hi Observor,
I could live with that, a pool for mudslide. But that is dependent on a Commissioner who knows Insurance, who cares about the Insurance marketplace, and who is not beholden to political interests, who gives the rates needed to the carriers who are requesting it from him (or from her). Now we must wait until a new Commissioner is inaugurated in late 2026-early 2027 for those changes, which is too long. There must be a better path forward than just pulling out of the market (like most of the Homeowners carriers did in 1994, post-Northridge). I am confident we can get a solution together, however. Thanks for your great comment.
The LA Times has an article today:
State Farm’s California freeze: Looming insurance apocalypse or political ploy?
https://www.latimes.com/business/story/2023-06-15/state-farm-homeowners-insurance-california