California Insurance Commissioner reports new data shows insurance companies renewed fewer homeowners in 2020 as FAIR plan last-resort insurance policies increased – 794 new policies in the county of Mariposa on the FAIR plan


Mariposa, California
Sierra Sun Times file photo

Commissioner Lara Pursues Necessary Actions for Home Security Mitigation Measures and Reinforcement of the FAIR Plan to Protect Homeowners

December 20, 2021 – LOS ANGELES – According to a new report from the California Department of Insurance, the number of homeowners not renewed by insurance companies fell 10% statewide in 2020 from the previous year. . Mandatory moratoria imposed by Insurance Commissioner Ricardo Lara accounted for more than 80% of the reduction in non-renewals statewide. The report also shows that the number of policies written by the FAIR plan has increased for the second year to reach a new high, highlighting the need for continued actions that Commissioner Lara has taken to strengthen her coverage for consumers. The data represented approximately 98.8% of the home insurance market in the state.

“More and more communities are rolling up their sleeves to protect their homes from wildfires. And more and more insurance companies are responding to my call to offer home security incentives,” said Commissioner Lara. “While we still have a long way to go until we have an insurance market that works for all Californians, I remain focused on increasing home security measures to protect homes and promote the compete in the market while strengthening the FAIR Plan, California’s insurance safety net, so it better meets the coverage needs of consumers and businesses.

The number of non-renewals by insurance companies fell from 235,597 in 2019 to 212,727 in 2020 – a decrease of 22,870 policies – while the number of new and renewed home policies issued by the voluntary market at the statewide increased from 8.62 million to 8.7 million, or an increase of 82,635 policies. California is the nation’s largest insurance market, and non-renewals by insurance companies affect less than 3% of California policyholders, though data shows the areas most at risk for wildfires experienced higher non-renewal rates.

The FAIR Plan, an association of insurance companies that serves as California’s “insurer of last resort,” provides insurance coverage to less than 3% of homeowners in the state. However, the number of consumers forced to obtain a FAIR Plan policy because they could not find an insurance company willing to underwrite coverage for them increased by 49,049 policies in 2020, to 241,466 new and renewal policies. . While the Department of Insurance data only covers 2020, the Sacramento bee reported in October that the FAIR plan called for continued policy growth in 2021.

The data also suggests that Commissioner Lara’s actions have contributed to lower non-renewals, particularly in areas at risk of wildfires. Commissioner Lara has put in place a series of temporary one-year moratoriums on non-renewals under state law he drafted when he was a member of the California State Senate, protecting more than one million policyholders in 2019 and 2.4 million in 2020 who lived within or adjacent to a Governor-declared wildfire disaster. Areas of the state under moratorium saw non-renewals drop nearly 20%, compared to a decrease of less than 3% in non-moratorium areas.

“The temporary non-renewal moratoriums are critical for California homeowners and communities as stakeholders work to reduce wildfire risk and restore available and affordable insurance options,” said Amy Bach, executive director of United Policyholders. “The science behind the promotion of home safety is indisputable and supported by consumer groups and first responders. Commissioner Lara has undertaken reforms to the FAIR plan that are long overdue and will help landlords in the future, even after this non-renewal issue is resolved.

Since taking office in 2019 after the deadliest wildfires in state history, Commissioner Lara has hosted in-person and virtual meetings on wildfire issues in 36 counties, attended by more than 10,000 local residents. From these meetings, he developed his overall strategy to support a competitive insurance market for all communities while strengthening consumer protection.

Some of the consumer protection measures Commissioner Lara has taken since taking office in 2019 include:

  • At his request, several major insurance companies, including Allstate, CSAA, and Farmers, among others, told the Department of Insurance that they would increase the number of new homeowners policies written in the state and cease or limit non- renewals.
  • Recent insurance company rate filings approved by the Department of Insurance have significantly expanded consumer-recognized insurer-recognized mitigation efforts and increased premium discount offers, up to 20% for homes. resistant to wildfires, to include 2 in 5 consumers – with five more companies offering incentives since 2019. full list of companies offering premium discounts is available on the Department of Insurance website.
  • Directed the FAIR plan to increase homeowners coverage limits to keep pace with rising home values ​​in California and provide a full homeowners insurance coverage option in addition to its current limited coverage . Although the FAIR plan resisted the commissioner’s order, a the judge ruled in July that the Commissioner has the current authority to order the FAIR Plan to provide these enhanced coverage options that benefit consumers.
  • Launched a partnership with Governor Newsom’s administration, bringing together the state’s major emergency response and preparedness agencies to create resilient wildfire safety measures for homes and communities. This group is about to complete its work.
  • Introducing new regulations for resilient safety mitigation standards and providing more transparency to consumers on their wildfire risk scores. Once officially passed, these regulations will require insurance companies to recognize homeowners’ safety actions when assessing wildfire risk to homes and communities, as well as let consumers know their scores. of risk, to encourage them and to be able to appeal to them.
  • Sponsored legislation that increases initial and evacuation benefits for wildfire survivors. Senate Bill 872 drafted by Sen. Bill Dodd of Napa created new protections despite opposition to the measure from the insurance industry.

Remarks:

Kristan F. Talley