Sacramento, California: A recent legislative proposal aims to address the issue of hundreds of thousands of Californians having difficulty obtaining reasonably priced home insurance.
The majority of large insurers have stopped doing business in the state, as ABC10 has been reporting for years. They point to escalating wildfire threats, rising house reconstruction prices, and rules they feel are onerous.
Governor Gavin Newsom unveiled his “trailer bill” at a press conference earlier this month, revealing changes to his proposed budget. Now, state lawmakers will debate it. On Tuesday, the bill’s precise wording was revealed.
“This market has to be stabilized. We must convey the proper messages. At his news conference on May 10, Governor Newsom stated, “We have to proceed.
Newsom unveiled plans for a law that he claimed would contribute to homeowner insurance becoming more accessible and reasonably priced.
“It’s impossible to overstate the urgency we both share,” he remarked.
The slow rate approval procedure is one of the reasons Californian homeowners insurance companies have been holding off on or reducing business.
Voters approved Proposition 103 in 1988, which requires insurance firms to get state approval before raising rates. The public can intervene in this process if they believe the requested increase is excessive.
It may take several months or even over a year to approve a rate. Insurance providers claim that their rates are not able to keep up with growing expenses.
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“We wish to expedite this rate ruling process over 60 days because we need to get it done,” Newsom stated.
A company’s rate request must be processed by the California Department of Insurance within sixty days, with additional time allowed if necessary.
Carmen Balber holds the position of executive director at Consumer Watchdog, an organization that frequently intervenes in the rate approval process to voice concerns about insurance companies’ perceived excessive rate increases.
Will we keep pressing insurance firms to be open and honest and to provide justification for their rates? Or will the Department of Insurance become the insurance industry’s guarantor, approving any rate rises they desire? And that’s the direction this idea is going,” she stated on Wednesday to ABC10.
She expressed concern that Newsom’s plan would result in higher rates for Californian homeowners since it would restrict the public’s power to oppose to a rate request.
“This law specifically targets the public involvement process that has prevented exorbitant rate hikes for homeowners in the last 20 years, saving them more than $2 billion,” the spokesperson stated.
Balber admits that action must be taken to restore full writing by insurance carriers in California. She expressed her desire for a law requiring insurance companies to provide coverage to homeowners who fortify their homes against wildfires.
At his press conference on May 10, ABC10 questioned Governor Newsom about his assurances to insurance firms that they would resume doing business in California provided, among other things, the rate approval process could be completed in 60 days.
“I’m proceeding with this trailer law because of this. Let’s go on,” he declared. “We’ve been discussing this with everyone in meetings.”
ABC10 inquired about the next steps for this proposed bill on Wednesday with the Governor’s office.
Speaking through a spokesperson, Alex Stack stated, “We plan to work with the Legislature on this policy proposal, which will determine how and when it would be enacted.”
