SACRAMENTO, CA, April 4, 2023--In the wake of oversight hearings last month, IIABCal has written every legislator on the California Senate and Assembly Insurance Committees, urging legislators, the regulator, and the industry to engage in a series of formal talks to look at every conceivable option to address the availability crisis. California consumers deserve the highest level of attention to this issue that even now has statewide consequences, and will only grow larger with the anticipated effects of climate change.
Here is the letter sent to Senate Insurance Committee Chair Susan Rubio. Almost identical letters were sent to every other member of the Senate, and Assembly Insurance Committees.
These letters come on the heels of a continuing exodus of independent agency insurance companies from California, including announcements this month that Nationwide is not accepting any new small commercial risks until it’s new rate filings are approved and take effect; that Oregon Mutual—which had already announced a complete withdrawal from personal lines—was “tapping the breaks” in a variety of ways on new commercial risk exposures; and that Tokio Marine has reportedly filed an application to withdraw from all personal lines business in California and will begin non-renewing all of those risks in June.
IIABCal Plan Would Get Insurers to Return
“Independent insurance agents and brokers across the state tell us that problems of availability and affordability, in both the personal and commercial property insurance markets, are the worst they have seen in their careers,” IIABCal Legislative Advocate John Norwood wrote.
The IIABCal plan—developed by experts paid from resources in the IIABCal Legal Defense Fund—has four, common-sense components:
1.) Giving insurers credit for reinsurance costs;
2.) Allowing insurers a higher cost-of-capital credit for catastrophic wildfire exposures; 3.) Permitting insurers to use empirical models to project potential future losses; and
4.) Requiring CDI to expedite its review of rate increase requests.
Consumers Now Stuck with the Worst Options
“We recognize that no one wants to see substantially higher rates for insurance,” Norwood wrote, “but we believe common sense dictates that consumers would be better off paying more for insurance if that restores a vibrant, highly competitive market where consumers have multiple options for purchasing coverage. As it is now, too many consumers are stuck with the two highest-priced options—in the California FAIR Plan, or with unregulated surplus line insurers— for purchasing insurance, often with inadequate limits or coverage.
IIABCal Needs Your Support
To help support IIABCal efforts to restore the property insurance marketplace in California, please contribute to the IIABCal Legal Defense Fund. Your support is needed to continue the progress we have already made in bringing public attention and political pressure to bear.