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California lawmakers to hold hearings on homeowners insurance crisis

by Cedric Guzman

California Lawmakers to Hold Hearings on Homeowners Insurance Market Crisis

California lawmakers are gearing up to hold a series of hearings this fall in an attempt to prevent a collapse of the state’s homeowners insurance market. Major insurance companies such as State Farm, Allstate, and Farmers have either halted the sale of new policies or put restrictions on them in California. They cite increased financial risk due to devastating wildfire seasons and rising inflation as the primary reasons for these actions.

The urgency of the situation was emphasized by California Assembly Speaker Robert Rivas, who called it an “incredibly urgent issue” during a press conference on the Legislature’s final night to pass new laws. Despite the efforts of key stakeholders, a last-minute deal to salvage the market before the deadline could not be reached. In response, Rivas announced plans to hold hearings statewide to involve community members. However, specific details regarding the location and dates of these hearings have yet to be released.

Rivas emphasized the need for consumer protection in any legislative effort. He stated, “We wanted an ironclad guarantee that consumers would be protected in any type of legislative effort.” Senate Pro Tempore Toni Atkins echoed these sentiments, highlighting the importance of hearing from the public. She stated that policymakers need to understand the communities’ concerns and find solutions to spread the risk across all affected individuals and ensure fair access to policies while sharing the costs.

Meanwhile, Governor Gavin Newsom’s administration is exploring its own strategies to address the crisis. However, as of last week, Newsom was not ready to share the details, including whether a special legislative session or executive order would be called. Newsom acknowledged the pressing nature of the issue, stating, “This is a fast-moving, not slow-moving issue. People are being dropped every single day.” He also revealed that his own home is covered under the state’s FAIR plan, designed to provide coverage to high-risk properties when private insurers refuse to do so.

California Insurance Commissioner Ricardo Lara released a statement emphasizing the need for partnerships between the government and the legislature to improve conditions for consumers, homeowners, and businesses in the state’s insurance marketplace. The Department also plans to introduce a package of regulatory solutions that streamline the rate review process and encourage public input.

The insurance industry has its own requests as lawmakers prepare to address the problem. They are seeking proper tools to predict risk accurately in order to price policies effectively. This includes the use of catastrophe modeling and factoring the cost of reinsurance into rates. Mark Sektnan, Vice President of the American Property Casualty Insurance Association, expressed optimism about the future of insurance in California once insurers have the ability to predict and price risks accurately.

However, consumer advocacy groups like Consumer Watchdog remain skeptical about the effectiveness of legislative hearings. Jamie Court, a representative from the group, urged lawmakers to consider a proposal that would require insurers to provide policies to homeowners who take measures to protect their homes against wildfires. Court argued that simply holding hearings where insurance companies discuss their issues or giving in to their demands would not solve the underlying problem.

As California lawmakers prepare for the hearings, it is clear that a multi-faceted approach involving policymakers, stakeholders, and the public will be necessary to address the crisis in the state’s homeowners insurance market.

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