A mansion burns in the Mountain Fire that struck in Camarillo, California, on November 6. New emergency home insurance regulations, revealed Monday, will require providers in the state to insure homes in high risk and wildfire-prone areas. File Photo by Allison Dinner/EPA-EFE
Jan. 1 (UPI) — New emergency insurance regulations in California will require home insurance providers write more policies, including in high-risk wildfire-prone areas, to ease the state’s insurance crisis.
The new state rules, released for the start of the new year, will force insurers to sell policies equal to 85% of their statewide market share, which could send rates soaring up to 40% higher, according to critics.
“If we look at what happened in other states, in North Carolina and Florida, we’re gonna see rates go up 40%,” said Jamie Court, president of Consumer Watchdog, which oversees the Department of Insurance and plans to sue to block the new regulations from going into effect.
Under the new regulations, insurers will be required to increase their coverage by 5% every two years until they hit 85% of their market share.
California deputy insurance commissioner Michael Soller said the new rules are meant to bring home insurers back to California.
“We think that long term, this is gonna help stabilize rates, because right now, people are experiencing ballooning premiums and rate spikes, but they’re not getting the benefit of increased competition,” said Soller.
“Under the reforms we’re putting in place, insurance companies, in order to utilize these tools, like modeling, they have to write more policies. That’s the change and we’ll enforce that through our rate authority,” Soller added.
The new regulations also allow insurance providers to pass the cost of reinsurance on to policyholders to avoid too much exposure with increased risk of natural disasters in California. Insurers have been pulling out of the state to avoid high claims.
“Californians deserve a reliable insurance market that doesn’t retreat from communities most vulnerable to wildfires and climate change,” Insurance Commissioner Ricardo Lara said in a statement.
Consumer Watchdog accused the commissioner of failing to do “a cost-impact analysis of his plan on consumers.”
“That’s because this plan is of the insurance industry, by the insurance industry and for the industry,” Court said.