California Insurance Commissioner Ricardo Lara last week announced a package of executive actions aimed at improving insurance choices and protecting Californians from increasing climate threats while addressing the long-term sustainability of the nation’s largest insurance market.
According to the commissioner’s office, this marks the largest insurance reform since state voters’ passage of Proposition 103 nearly 35 years ago, California’s Sustainable Insurance Strategy is a comprehensive approach building on Commissioner Lara’s multi-year effort to modernize California’s insurance market after meeting with thousands of Californians since he took office in 2019.
“California Governor Gavin Newsom today issued an executive order urging prompt regulatory action in support of Commissioner Lara’s actions for communities affected by climate change,” a news release states. “The actions announced today are aimed at addressing problems fueled by climate change and being experienced by states across the nation including global inflation and increased costs for rebuilding that have led to several insurance companies pausing coverage for writing new homeowners and commercial insurance policies, non-renewing existing consumers, and increasing rates to maintain their financial stability.
“Unlike public utilities, which are required by law to cover all consumers, insurance companies will not write insurance, especially in high-risk areas, unless they are able to ensure they have the capital and reserves to fully meet all insurance claims submitted by consumers, cover their expenses, and earn a fair return. Insurance company actions following multiple years of major wildfires and winter storms have pushed more people to the FAIR Plan, which is intended as California’s insurer of last resort but has become the only option in some areas of the state.”
The California Association of Realtors offered support for the action through a prepared statement.
“California REALTORS® thank and support Commissioner Lara for taking necessary actions to strengthen and stabilize the state’s insurance market; a strong insurance market is essential to maintaining a healthy housing market,” said C.A.R. President Jennifer Branchini. “We look forward to working with the Commissioner and stakeholders to ensure that Californians have access to critical and reliable property insurance to protect their most valuable asset ― their home.”
Click here for more on the announcement.
Further reading:
Associated Press: Things to know about California’s new proposed rules for insurance companies
