Homeowners Insurance Crisis Attracting Increased Attention

With the California Legislature set to return next week from its Summer recess, more attention is being focused on the property insurance availability and affordability crisis and pressure is mounting for legislators to address the situation.

With new insurers like Kemper announcing measures to stop or restrict writing homeowners’ insurance in the state, more and more legislators are hearing about the insurance availability and affordability issue across the state, and many are finally paying attention, according to IIABCal Legislative Advocate John Norwood.

“Discussions could get more serious as legislators return and there may be an opportunity for some legislative response during the last month of the session,” he said.  “This is the closest we have been to getting any traction on these issues, but it remains to be seen whether there is enough Legislative will to push this issue over the line.”

IIABCal has been represented in a series of meetings the last several weeks with representatives of the Insurance Commissioner, Governor, legislative leaders, and organizations in a coalition formed by IIABCal of disparate but hugely influential groups, including the California Association of Realtors, the California Building Industries Association, the California Farm Bureau, the California Mortgage Bankers Association, the California Credit Union League, and the California Association of Community Managers.

Outreach by this coalition appears to have succeeded in focusing legislators and other policymakers on the severity of the availability crisis, and the need for immediate remedies, but no agreement has been reached on what would be included in potential legislation and/or regulations that could be promulgated by the California Department of Insurance (CDI).

A solution could include elements of IIABCal’s Plan

IIABCal has developed a plan designed to speed rate approval decisions by the Department of Insurance and enhance rate adequacy for insurers writing homeowners insurance.  That plan, which experts believe would incent insurers to resume writing and renewing homeowners’ policies, would give insurers credit for their reinsurance costs, allow them to use risk modeling in setting rates, and expedite review by CDI of insurers’ rate change applications.

To have any real chance of action relative to this issue, insurers will have to make strong commitments to resume writing and renewing policies in the California market, especially in the wildfire urban interface — a requirement IIABCal strongly supports, if insurers are given rate adequacy and timely decisions on rate change applications.

 “There is very little time left in the legislative year,” IIABCal General Counsel Steve Young said, “these discussions are the closest we have come since the availability crisis began to a serious effort by interested parties to find meaningful solutions.” 

Kemper announces exit from preferred home and auto markets

This week, Kemper Personal Insurance announced it was “exiting the preferred home and auto insurance market and will actively reduce the business beginning immediately, with all policies being non-renewed or canceled in accordance with applicable state regulations. This decision is related only to the Kemper Personal Insurance brand, and does not impact Kemper’s other brands, Kemper Auto and Kemper Life.”

The Kemper Personal Insurance press release is available here.