PLEASANTON, CA, Oct. 11, 2022 -- In an official statement released today, IIABCal said it wants California consumers to be protected, particularly those already suffering from the effects of wildfires, and calls on Insurance Commissioner Ricardo Lara to do more.
"It is concerning to IIABCal that Commissioner Lara has refused our requests to fully implement a law that he, himself, wrote, when he served in the State Senate, to protect consumers from wholesale cancellation and non-renewal of their homeowners’ insurance policies," IIABCal Senior Vice President & General Counsel Steve Young said.
"California Insurance Code Section 675.1 gives the Commissioner extraordinary powers to limit cancellation and non-renewal in areas where wildfires have occurred. When the Governor declares a wildfire emergency in designated areas, the Commissioner is empowered to prevent insurers from cancelling or non-renewing residential insurance policies for one year in those areas, and in immediately adjoining zip codes," Young said.
"The law, clearly and unambiguously, allows for such protective orders to be applied to “all policies in effect” in the designated areas on the date the Commissioner’s order takes effect," he said. "But the California Department of Insurance under Commissioner Lara has not fully implemented this protection. As recently as Sept. 19, in response to the emergency declarations related to the Mountain, Barnes, and Fork fires, Commissioner Lara did not require insurers to rescind non-renewal notices that may have been issued, but not yet taken effect, in the protected areas."
"As independent insurance agents and brokers in California know all too well, when a consumer loses their home insurance policy in this market, they face the prospect of paying exponentially higher premiums for substantially less coverage — if they can find any insurer even willing to offer coverage."
Steve Young, IIABCal Senior Vice President & General Counsel
Young said this is a huge problem for consumers living in and near catastrophic wildfire zones. He said there can be significant delays between the occurrence of a wildfire and the gubernatorial declaration of emergency that triggers the Commissioner’s powers. In the case of the Colorado Fire at the start of 2022, almost six months elapsed before the Governor’s declaration took effect—which permitted certain insurers to issue widespread, wholesale notices of non-renewal, months in advance of the declaration which was inevitably going to be issued.
And, as independent agents and brokers in California know all too well, when a consumer loses their home insurance policy in this market, they face the prospect of paying exponentially higher premiums for substantially less coverage—IF they can find any insurer even willing to offer coverage, Young said.
IIABCal has met with senior staff at the Department of Insurance and urged the Commissioner’s Office to implement their emergency powers more literally—to apply future restrictions on cancellation and non-renewal to “all policies in effect” on the date the orders are issued, and to require insurers to rescind any pending notices that may have been issued prior to that date.
"To date, no action has been taken," Young said. "The law expressly gives Commissioner Lara this power and the people of California expect him to use it."