In light of the major announcement by State Farm that it will accept no new property insurance risks in California, IIABCal is redoubling its efforts to press legislators and the Insurance Commissioner to take steps necessary to reopen property insurance markets.
IIABCal is in communication with the chairs and professional staff of the two insurance committees in the Legislature, and is readying outreach to other non-insurance organizations—including the California Association of Realtors, and the California Farm Bureau—whose members are gravely impacted by diminishing property insurance availability.
While the California Department of Insurance appears to be moving, at long last, to approve some rate increase requests filed by insurers, more is required. IIABCal has developed a comprehensive four-part plan that experts believe would create the incentives necessary to convince insurers to resume writing and renewing property risks. We now hope to convince other industries to support these efforts.
"State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market," the company explained in a statement. "It's necessary to take these actions now to improve the company's financial strength. We will continue to evaluate our approach based on changing market conditions."
The company indicated it hoped to "work constructively" with CDI and legislators, but said, “it’s necessary to take these actions now to improve the company's financial strength."
The IIABCal plan to restore the property insurance market—which could be effected by the Commissioner himself, or through legislative action—calls for insurers to be given credit for reinsurance costs, to receive a cost-of-capital adjustment for wildfire risks retained, to be allowed to use prospective rate models, and to receive expedited rate change decisions. More information about the IIABCal plan can be found here.