Before the California Legislature adjourned this month, it was able to fulfill most of the wishes of most Democratic interest groups, especially labor unions.
However, lawmakers left town without doing anything concrete about something that threatens the mental and economic health of millions of homeowners and those looking to own one: the fast which reduces the availability of home fire insurance.
One by one, insurers are reducing or eliminating their exposure to California, which has paid billions of dollars to cover years of losses from large wildfires and, they say, faces a wildfire threat. which is likely to increase with climate change.
With Gov. Gavin Newsom and Insurance Commissioner Ricardo Lara involved in the background, there have been weeks of private negotiations with lawmakers, insurance advocates and other stakeholders on how to strengthen the state’s insurance market.
However, negotiations ended a week before the Legislature adjourned without an agreement, signaled when state Senator Bill Dodd, a Democrat whose district centered on Napa is one of the most fire-prone regions in state, sent a text message: “Deal is dead. Very sad.”
Discussions revolve around changing the way insurers calculate risk, from basing it on past experience to including potential future risk. Such a change would likely increase premiums and lawmakers want firm assurances that companies will continue to write policies in fire-prone areas when the change is made.
At the end of the session, there were public assurances that the issue would not be forgotten.
“We heard loud and clear from our residents that access to insurance is a problem,” Assembly Speaker Robert Rivas said in a statement.
The departure of the Legislature focused the issue, at least for a few months, on Lara and Newsom, who said, “We can do a lot of things. And I am very thoughtful. We can do it all.”
However, Newsom did not list any specifics. On Thursday, he issued an executive order urging Lara to “take action to strengthen and improve California’s property insurance market.”
Almost immediately, Lara issued new rate-setting regulations, which he described earlier as “a package of regulatory solutions that will streamline the department’s rate review process , which will open it up to fair public input – not just the entrenched interests that benefit materially from the status quo.”
Newsom, Lara and the regulations drew praise from the American Property Casualty Insurance Association, which said, “Everyone understands that California’s insurance market is in a looming crisis that requires immediate solutions. of policy to protect consumers’ access to the coverage they need.”
Given the industry’s support, it is likely that the new regulations will allow it to include, at least to some extent, estimates of future risk from forest fires in their rates which could lead to higher premiums. .
Newsom stopped short of declaring an emergency executive order on Thursday, which would have given Lara the authority to issue new rate-setting rules without going through the usual procedural steps.
Earlier today, Consumer Watchdog, the organization that sponsored a 1988 overhaul of insurance regulation, Proposition 103, and has been a critic of Lara since almost his first day on the job, issued a warning on Newsom and Lara about dealing with an emergency. basis.
Later, the organization said, Lara’s move “would allow insurance companies to use secret algorithms to set rates for homeowners’ coverage for wildfire and to increase costs of reinsurance premiums will lead to higher insurance premiums.”
So there it is, a complex combination of economic, political and social factors and a huge trade-off between the availability of coverage, which is a must for anyone with debt, and the costs.
CalMatters.org is a nonprofit, nonpartisan media venture that explains California politics and policies. This article is reprinted with their permission.