New Plan From Insurance Commissioner Hopes to Attract Insurance Companies Back to the State
Homeowners struggling to obtain fire insurance may have relief on the horizon as lawmakers work to bring insurance companies back to
In recent years, many insurance companies have begun canceling policies across
"This is the worst I've seen it since 1994 and the
Baxter, who started his company in 1989, stated that the current climate is making companies leery of writing policies. The rising costs of construction, building materials, and the frequency of natural disasters have also placed a strain on insurance companies.
"None of the carriers want to write. Or they want to write, but they can't write in this environment," Baxter said. "It's all being affected."
The struggle to find insurance in parts of the
In
A month later, in 2018, the storms arrived and triggered debris flows that brought down mud and rocks onto
These events mixed with changing weather and costs of paying out on insurance policies have made providers reluctant to provide insurance in parts of
She says that the lower parts of the hill have been labeled high fire risk and everything higher up is considered extreme fire risk.
"Those designations really affect everybody's rates if they don't get cancelled period," MacMillan told Noozhawk. "There are 2,100 homes approximately in our association's area, and there have been hundreds of cancellations. And most often those people cannot find homeowners insurance except for the FAIR Plan with
The FAIR Plan is insurance provided by the
However, as the number of homeowners unable to obtain traditional insurance has risen, the FAIR Plan has taken on more residents — stretching the program's resources.
However, state officials are working to address the insurance crisis.
Addressing the Crisis
In June, California Insurance Commissioner
Under Lara's plan, insurance companies would be required to meet different criteria.
For larger companies in fire-distressed areas, they will meet a minimum of 85% of coverage for properties. The company will be required to meet this requirement within two years of filing a new rate plan and report its progress to the
Companies that already meet this standard must maintain this rate for a minimum of three years.
Smaller insurance companies, new providers, and companies that are not currently writing in distressed areas and cannot meet the 85% minimum must increase their policies by 5%.
Commercial insurance providers will need to expand coverage in wildfire-prone areas by 5%, according to a press release from Lara's office. This will provide more options for farms, wineries, homeowner associations, and other businesses.
"I'm definitely hopeful it's being talked about," Weiser told Noozhawk. "I think the most promising part is that now they will allow the insurance companies to do forward-looking catastrophe modeling in certain parts of the state.
"That's something that a lot of other states have been doing for a while but is pretty new to
The method, known as catastrophe modeling, will allow insurance companies to modify their prices based on the history of the region, the level of risk, and other factors.
Catastrophe modeling is a system that insurance companies use in states to assess risk across different regions.
Wildfires were not eligible for the catastrophe model.
Under Lara's new plan, companies that meet the state's new guidelines will be able to apply catastrophe modeling to wildfires, terrorism, and flood lines.
Another positive Weiser pointed out was changes to the California FAIR Plan.
One change to the FAIR Plan is the increase of coverage for commercial properties to
Even though Weiser is happy that state officials are trying to address the insurance crisis, parts of the new strategy worry her.
One of the things she is starting to see is a massive increase in insurance plans for residents.
Because of the new guidelines, companies that stayed or are returning are offering plans that are more expensive or increasing the premiums for current customers.
Some of her clients were paying
"That's a big jump because the companies are saying, 'Well, we got the approval. We are still insuring your home. Others would consider it high fire.' So, they will still do it, but it puts our community members and our clients in a difficult position," Weiser said.
As state officials and insurance providers wait to see whether the Sustainable Insurance Strategy works, Weiser encouraged homeowners in fire-prone areas to plan ahead and not treat fire insurance as an afterthought.
She also encouraged homeowners to be aware of when their insurance plan is scheduled to end and research options in advance. This is especially important since she claims the insurance field can change quickly, even in a matter of 60 days.
"Be proactive," Weiser said. "Fight for yourself [and what] you want your options to be."
Editor's note: A previous version of this story said customers may not be eligible for the FAIR Plan if they can obtain insurance from a private company. However, customers could be eligible for the FAIR Plan if other options are unaffordable, according to state guidelines.
The post New Plan From Insurance Commissioner Hopes to Attract Insurance Companies Back to the State appeared first on Noozhawk.
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