CA Senate Republicans Send Letter To Insurance Commissioner Lara Over Faltering Homeowners Insurance Market
5 insurance companies have limited, completely dropped new homeowners insurance applications in the last 3 months
By Evan Symon, August 25, 2023 2:30 am
California State Senators delivered a letter to California Insurance Commissioner Ricardo Lara on Thursday, urging him to take more direct action in fixing the state’s faltering homeowners insurance market.
In the past three months, 5 insurance companies operating in California have either stopped accepting all new homeowner insurance applications or put severe limits on how many new applications can be accepted in a year. State Farm because the first company to no longer accept new applications for any kind of insurance other than personal vehicle insurance in May. In June, Allstate had a similar announcement, saying that they had already not been accepting new applications all year. Farmers was the next to announce last month, reducing the overall number of new monthly policies that they would accept. Earlier this month the most recent insurance companies to announce that they would be ending homeowners policies, AmGuard and Falls Lake, only further limited the insurance options for homeowners. This is all on top of several insurance companies, such as AIG, leaving the California homeowners insurance market in the past few years.
While each company had a different number of reasons for their decision, all generally had the same theme: Construction cost increases, inflation, wildfires, and a challenging reinsurance market were all listed. However, the largest reason for the companies overall has been the rapidly growing number of catastrophe exposure risks in the state. Insurers included wildfires, floods, and other “extreme weather events.” Insurance companies have increasingly been feeling the burden, leading to them changing their position in the state.
The growing number of insurance companies leaving the market has concerned many in the state, with some saying that it is now a crisis. Others worry that more could leave later this year and in 2024, potentially leading to a collapse of the home insurance market in the state, and leaving many homeowners uninsured or faced with a very limited number of options as a result.
A letter to Commissioner Lara
This led to Senate Republicans calling for Commissioner Lara to take action immediately, both to stop more insurance companies from leaving the state and to keep homeowners insurance available to all residents.
“The insurance industry is broken and only you have the power to fix it – and the responsibility,” Senate Republicans said in the letter. “Proposition 103 gave California the unique situation of having an elected Insurance Commissioner responsible for regulating the insurance industry. Our caucus has pushed for legislative fixes for years now – even decades – to try to prevent the homeowners’ insurance market from collapsing. Unfortunately, our efforts fell on deaf ears and major insurers have now left the market, and we fear more will be following suit.”
“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. 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.”
“We urge you to begin the common sense solutions to the insurance market that California homeowners desperately need and we stand ready to help you from the legislative side if statutory changes are necessary. But we need you to be the catalyst for modernizing the market. Our constituents are losing options quickly and we need to stop the bleeding now.”
Senate Minority Leader Brian Jones (R-San Diego) expanded on the letter in a statement, saying, “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. 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.”
Senator Brian Dahle (R-Bieber) added, “My constituents are already suffering. In order to avoid exponential and unaffordable rate hikes on Californians in the near future, we must act now. Californians can’t afford for a catastrophic wildfire to collapse the market and leave those insured without the coverage they may need to rebuild.”
Insurance experts agreed with with the lawmakers on Thursday, albeit noting that what Lara could do would likely be limited.
“Lara could definitely do some things to limit the damage that has been done and perhaps entice some of these companies to comeback in a smaller capacity,” said Trevor Connery, a lobbyist who has worked for insurance companies in the past. “There is plenty he can do. But even all that is stymied by big decisions that need to go through the legislature first, through the Governor, or passed by voters. But the hard truth is that a lot of this is really tied with the growing number of wildfires, floods, landslides, and other weather risk events that are becoming more commonplace in the state. Losses are everywhere for companies. At the very least, Lara needs a sit down and to go over all causes of the companies leaving and figure out a plan on how to deal with it. It needs to be transparent.”
“This letter is a good gesture and perhaps could get the ball rolling. But there is a lot that needs to be done, and until insurance companies stop seeing losses, this trend will continue.”
Lara has yet to respond to the letter as of Thursday evening.
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I already know of a friend who was going to buy a house for his father but pulled out due to the difficulty of purchase homeowners insurance.
Lara’s silence speaks volumes .
How Bold!
They sent a letter!
Changes nothing!
In recent years, California was using the 747 “Global Supertanker”, owned out of Colorado. It was used on the fringes of the Camp Fire. It can deliver 19,000 of retardant or water or a mix. California was paying $16,000 per hour to use it. The owners went bankrupt a year or two ago. It was used to fight a fire in Chile., et. al. I have urged that the State of California buy 50 such planes and convert them to a similar tanker. 747s are in boneyards in Texas, Spain, one Republic in the old SU. They are available. If it costs $100 million to buy and convert each one, $5 billion would buy 50 of them. I’ve suggested that a consortium of California, Oregon, Washington, Idaho, Montana, Wyoming, Colorado, NM could do all of this since all are plagued by wildfires. Since Canada is now also having bad wildfires, we could include Canada in the consortium. Each State could be billed by the number of sorties it needed in a given year. Surely all of those together could afford $5 billion total to set this up. McClellen was used to support the Global Supertanker at the time of the Camp fire. Storage of big barrels of retardant, mobile air compressor to recharge the tanker when on the ground- a big truck- etc. We’d need a similar base in S. California and more in the additional states. Diane Feinstein got for California seven small tankers from the Coast Guard that can deliver 4,000 gallons of retardant per flight. It took years of paperwork to get those. We need 50 of the big 747s. Spread the cost over all of this States above and it would not be a huge cost per state. I think that 50 of these on any one fire, even a big fire, could limit the damage, maybe a lot.
We currently use a DC-10 to fight Calif. wildfires. People see that and think “Oh, we have one or more big air tankers to fight our fires. We have exactly ONE. We need to add 50 more. The feds could possibly help with the cost since we now give billions to Ukraine, alone among the world’s nations.
Drop a line to Governor Newsom, State Capitol, Sacramento urging this action. Over the past two years I have suggested this with utterly no response. DO WE HAVE A GOVERNMENT IN CALIFORNIA OR DO WE NOT?
Do we have a government in California? No. What we have is a criminal gang of Democrats that were installed with voter fraud and rigged voting machines who are deliberately destroying the state. You have to pay off the Democrat mob bosses off first if you want anything done.
great stuff, TJ.
QAnon is calling – they said you forgot to log off.
How much do your criminal Democrat thug masters pay you to defend them with lame posts?
How about action instead of strongly worded letters? It’s no wonder that many Republican voters have given up on the RNC and have become independents?