[ad_1]
State Farm pet insurance review 2026: 1.7 out of 5 stars
[ad_2]
Tag: insurer
-
After insurance pullback, advocates demand a ‘bill of rights’ for California policyholders
[ad_1]
A leading consumer group is proposing a policyholder rights initiative that would require insurers to offer coverage to California homeowners who fireproof their homes — or lose the right to sell home or auto insurance in the state for five years.
The Insurance Policyholder Bill of Rights was filed with state Atty. Gen. Rob Bonta’s office last week by Consumer Watchdog, the Los Angeles advocacy group whose founder Harvey Rosenfield authored Proposition 103, the 1988 initiative that governs California home and auto insurance law.
The initiative for the November 2026 ballot also would give policyholders not renewed by their insurer 180 days to make home repairs and improvements necessary for renewal if they face unavoidable permit, construction and other delays.
“The Insurance Policyholder Bill of Rights guarantees that people who invest in wildfire mitigation get coverage and prevents companies from canceling people simply because they file a claim,” Rosenfield said in a statement.
Insurers can seek six-month waivers of the rule in certain geographic areas but would need to show they have an overconcentration of risk there.
The proposed initiative comes after insurers began pulling back from the California market a few years ago after a spate of wildfires and began seeking double-digit rate increases. However, it is unclear whether the group will even start gathering the 500,000-plus signatures it would need to make the ballot.
Carmen Balber, executive director of Consumer Watchdog, said the measure was prompted by a separate initiative filed by a Roseville, Calif., insurance broker that would repeal core reforms of Proposition 103, which established an elected insurance commissioner with the right to review requests for rate hikes before they take effect.
The proposed initiative — called the California Insurance Market Reform and Consumer Protection Act of 2026 — was filed by Elizabeth Hammack, owner of Panorama Insurance Associates. It would allow insurer rate increases to take effect prior to any rate review, though they could be suspended later if the insurance commissioner determines the market is not “reasonably competitive.”
Additionally, insurers would have to provide premium credits to policyholders who take steps to reduce fire dangers on their property, under the measure.
The measure also would abolish another core element of Proposition 103, by banning payments to “intervenors” such as Consumer Watchdog, which insert themselves in the rate-review process and seek to block or reduce increases — a provision that has irked the industry since its inception.
Hammack did not immediately respond Monday to requests for comment.
In an earlier email exchange with The Times, she said: “I drafted up the initiative and filed it out of pure frustration about the horrible California insurance market dysfunction and the feeling of just needing to do something, anything, to make a difference.”
Balber said it requires $5.5 million to gather the required signatures for an initiative. While the group is confident it could raise the funds, she said it would not proceed with its own measure unless Hammack raises money and moves forward beyond the filing stage — or if Consumer Watchdog is swamped by donations.
“There are hundreds, if not thousands of Californians who are fed up with the insurance industry and after the Los Angeles fires, I can guarantee you that there are people out there who would be begging to fund a ballot measure that would finally hold the insurance industry accountable,” she said.
Proposed ballot initiatives in California must be reviewed by the attorney general, who prepares a title and brief summary. After that, proponents have 180 days to gather signatures.
The proposed dueling ballot measures come at a time when there is widespread anger not only over rate increases, but how some insurers have handled claims stemming from the Jan. 7 Los Angeles-area fires, which destroyed thousands of homes and killed at least 19 people.
The Eaton Fire Survivors Network in Altadena and local politicians have demanded that Insurance Commissioner Ricardo Lara halt anymore rate increases for State Farm General, California’s largest home insurer, unless complaints over its claims handling are resolved.
In addition to State Farm, the state’s insurer of last resort, the California FAIR Plan, has come under attack for denying smoke-damage claims. That prompted Gov. Newsom to send a letter this month calling on the plan to handle the claims “expeditiously and fairly.”
The plan has taken on hundreds of thousands of policyholders in recent years as insurers began pulling out of the state’s fire-plagued homeowners market. Hammack’s initiative seeks to have the plan establish a schedule to shrink its roles when more coverage from carriers becomes available.
Her measure also would require the California insurance commissioners to have at least five years of insurance experience, either with a regulator, insurer or in other roles, such as actuarial science.
Times staff writer Paige St. John contributed to this report.
[ad_2]
Laurence Darmiento
Source link -
Fewer Citizens policyholders, yes, but will they have a better shot at winning a claims dispute?
[ad_1]
The number of property owners covered by the state’s insurer of last resort has dropped dramatically — but options for resolving disputes between Citizens Property Insurance Corp.’s and its customers over what’s owed when a claim occurs recently got a boost.
The state-backed insurer expects to have slightly more than half a million policyholders by the end of the year. The policy roster has plunged 63% from the 1.4 million-policy peak in September 2023, when the state’s insurance market wobbled in the aftermath of 10 private insurers going insolvent between 2019 and 2023.
That means that it’s less likely that all Florida insurance policyholders will be tapped to shore up Citizens in the event of a catastrophic hurricane, as happened after a conga line of storms pounded the state during the 2004 and 2005 seasons.
But hidden in the bullish picture is a battle over an unresolved byproduct of Florida’s tort reform efforts this decade.
Namely, how to create a healthy property insurance market and still provide a channel for customers to challenge claims settlements they feel do not reflect the cost of the damage they have suffered, either by a broken pipe or a hurricane. As Florida enters the most active portion of the 2025 hurricane season, it is no small controversy.
And Citizens and its remaining 500,000-plus customers are only the latest to face this vexing, and potentially costly, challenge.
How tort reform boosted insurance market, raised legal challenge issue
Fears of a property insurance meltdown that could have paralyzed Florida’s real estate industry — and the potentially crushing liability that Citizens was carrying — spurred special legislative sessions to prevent a crisis.
During those sessions in 2022 and 2023, specifically, lawmakers enacted judicial system changes they believed necessary to curtail excessive — and some even say fraudulent — lawsuits they and insurance industry voices said were taking a toll on the private market in addition to the state’s climatological and geographical vulnerability to hurricanes.
Today, state officials say those reforms are doing the job. But lawyers and consumer advocates remain concerned that customers will ultimately get fleeced twice — first by still nation-leading pricey insurance premiums and then by claims checks that will leave them paying more than they should have to in repairing damage.
The changes hobbled policyholders’ ability to sue over claims disputes with their insurer. That is because attorney fees are no longer automatically added to a settlement as they formerly were, decreasing attorney incentive to take the cases. It is especially the case when the disputed amount is on the smaller side but a big expense for a household: $10,000 or so.
Years later, Citizens has depopulated — the term for shifting policies from its books to private insurers — to the tune of 1 million customers.
A major reason this has been possible, the company, state officials and insurance industry representatives have said, is because the legal reforms have lured new private insurers into Florida. On Sept. 18, the Office of Insurance Regulation announced two new property insurers have stepped into the market — the 15th and 16th new insurers since the legal changes were made.
“This is all great news,” Jeremy Pope, Citizens’ chief administrative officer, told a Citizens’ committee Sept. 17.
But one of those legal changes that Citizens wanted — and sees as crucial in reducing its litigation costs — is facing its undoing.
Part of the effort to tamp down costs
In 2023, the Florida Legislature granted Citizens the right to send claims disputes to a special court run by the state Division of Administrative Hearings, often referred to as DOAH.
There, judges, paid by salaries that Citizens funds, act as arbitrators in Citizens’ disputes. The insurer’s board of governors approved a $19.3 million contract with DOAH to pay the administrative costs of these claims hearings through 2027.
In those proceedings, however, policyholders who get in front of the judge almost always lose — 90% of the policyholder claims against Citizens that reached the arbitration judge were denied, giving Citizens the right to legal fees from the claimant.
Now, though, the procedure is on hold, as a Hillsborough County judge has found that a Hurricane Ian victim has a substantial chance of success on the merits of his case. The judge’s ruling found that the DOAH arbitration procedure should not go forward in the case of Martin Alvarez, or any other Citizens’ policyholder, because of the violation of constitutional rights it presents.
Hurricane Ian did catastrophic damage in 2022. Now a dispute over a claim by an Ian victim may boost prospects for consumers challenging claims payments by Citizens Property Insurance Corp.
Judge Melissa M. Polo issued an injunction against the administrative court hearings in these cases. The plaintiff’s attorney argues that this quasi-judicial procedure unfairly violates a policyholder’s right to a fair trial. More lawsuits seeking to void the arbitration have followed.
Citizens, however, has appealed the injunction against the DOAH arbitration hearings and continues to refer cases to the administrative procedure since that Aug. 2 injunction. It plans to increase the number cases going to the arbitration hearings to 3,800 a year, according to public documents first reported by the Sun Sentinel and ProPublica.
Faster, cheaper, but is it fair?
The DOAH arbitration hearings allow disputes to be resolved much faster, said Michael Peltier, spokesperson for Citizens. It usually takes less than 90 days, compared to an average of two years in civil court, he said.
“The DOAH process, which has been operating for 50 years, offers a fair and efficient venue for settling disputed claims and the statute that specifically authorizes Citizens to use DOAH is constitutional,” Peltier said. “For policyholders, the process allows disputed claims to be resolved in a matter of months instead of waiting nearly two years under the state court system.”
The Hillsborough judge’s injunction, however, is seen as a victory by plaintiff attorneys who see Citizens’ 90% success rate in the administrative hearings as evidence of a deck stacked against the policyholder with a legitimate claim.
More: Wind or water damage? Ian court cases show what policyholders face in challenging insurers
“It’s shocking,” Harold Levy, founder and managing partner of HL Law Group in Fort Lauderdale, said of the one case he’s seen where a policyholder was able to get a favorable decision in the administrative court, compared to the number he’s seen withdrawn or settled.
“When you look at it, practically speaking, you have a very, very advanced timeframe. Things have to happen very quickly,” Levy added. “You’re spending a lot of money up front and timeframes that are very onerous, and you’re going in front of judges who we feel are very strongly on the side of Citizens.”
The chances and the odds
About 1,500 Citizens’ policyholder cases have gone to the administrative procedure since the practice was started in 2024, as of a count dated July 2025. Citizens can invoke the procedure after the insurer receives notice of a policyholder’s intent to sue.
Peltier says that 90% of that initial group sent to the administrative procedure settle before it gets to the judge. And 1-in-4 are settled for an average of $30,000, he said.
“When we see evidence that supports a finding that the claim is covered, we give the policyholder the benefit of the doubt and pay the claim,” Peltier said. “I would argue that that is a major reason our success rate is so high when those last few cases make their way to final hearing.”
Another 50% of the cases are settled by Citizens with a $250 to $300 payment. And another 11% of the cases have been withdrawn, Peltier said.
In the Tampa case, however, paperwork from another administrative claim hearing illustrates the high stakes even when a jury trial is not involved. In one West Palm Beach case, a CItizens’ policyholder withdrew her claim on the hearing date. Still, the policyholder was ordered to pay Citizens’ court costs: $45,000.
Arguments for injunction are due in the District Court of Appeal next month.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today
This article originally appeared on Palm Beach Post: Judge blocks Citizens dispute arbitration hearings critics call biased
[ad_2]
-
Wildfire victims in limbo as fight with insurers hits another snag
[ad_1]
After receiving more than 1,000 complaints from Jan. 7 fire victims about how insurers are handling their claims, state regulators are considering referring hundreds of the cases to mediation — a little used practice that some consumer advocates fear could hurt policyholders.
The Department of Insurance has been bombarded with complaints from property owners since the Palisades and Eaton fires destroyed more than 16,000 structures and damaged more than 2,000 others, causing up to $45 billion in insured damages by one estimate.
Fire victims say they have experienced slow responses from insurance company claims handlers, been rotated to multiple adjusters, denied hygienic testing for toxic chemicals and given lowball offers.
The department has encouraged fire victims unhappy with how their claims are being managed to file complaints. They are then assigned a compliance officer who attempts to resolve the issues with their insurer.
Joy Chen, chief executive and co-founder of the Eaton Fire Survivors Network, which, according to its website, has
some 5,000 members, said that the compliance officers have not been successful in sorting out the disputes.“Across thousands of complaints I’ve seen discussed, I have barely heard of a single survivor who said DOI actually helped them resolve their claim,” she said. “At best, people say things like, ‘I finally got a return call from my adjuster — right before they left for vacation again.’”
The department says the complaint process has helped policyholders whose homes were destroyed or damaged by the fires recover $67 million in insurance payments.
Still, the department is considering referring some 400 unresolved complaints to its residential mediation program, two department sources with knowledge of the complaint process told the Los Angeles Times.
That would far exceed the typical number of referrals in a year.
Michael Soller, a spokesman for Insurance Commissioner Ricardo Lara, said it was likely that some unresolved complaints would be referred to mediators but couldn’t say how many.
In 2023, the latest year for which department statistics are available, just five residential insurance disputes were sent to mediation, resulting in settlements. The policyholders filed claims totaling $3.05 million and settled for $1.55 million.
Over the last 10 years, there were years when no disputes went through mediation, despite a growing number of catastrophic fires statewide. Although 2019 was the busiest year for mediations in the last decade, only 72 cases were referred that year, according to the department’s annual reports.
Tony Cignarale, the department’s deputy commissioner of consumer services and market conduct, said complaints are referred to mediation when policyholders and insurers reach an impasse despite the assistance of the department’s compliance officers, who number about 100 and handle complaints regarding multiple lines of insurance.
The officers seek to determine what might be delaying resolution of a claim and ensure that insurance companies are complying with the law and their policies. However, they are not empowered to adjudicate such differences as factual disputes.
“We try to move the ball forward, but we can’t be the judge and jury and say in this particular smoke damage claim you needed to test for these various things — asbestos, lead, chromium, etc. — and you need to do this type of restoration,” Cignarale said.
He said a large number of smoke-damage cases arising out of the Jan. 7 fires and a lack of an industry standard for testing and restoration of the homes have complicated claims.
Attorneys representing scores of Jan. 7 fire victims have filed suits against insurers and the California FAIR Plan Assn., the state’s insurer of last resort, over their handling of smoke-damage claims. Insurers deny treating policyholders unfairly.
“I think the difficulty with mass disasters is the system is stressed, and there are going to be elements of the system that break down. And after every disaster, we find something new that could be improved,” said Rex Frazier, president of the Personal Insurance Federation of California, which represents major property and casualty insurers.
Mediation is free for policyholders and available for cases involving claims exceeding $7,500 and disputes valued at more than $2,000. Policyholders can bring an attorney and have the right to reject participation in the process, but insurers are required to participate. Neither side is obligated to accept any offer.
The program has its origins in a pilot program initiated to close hundreds of unresolved complaints after the 1994 Northridge earthquake. It was made permanent in 2005 through a bill that established a $1,500 flat fee borne by insurers and paid to mediators for each case. The department maintains a panel of about 90 independent mediators, Cignarale said.
Attorney Arnie Levinson, a veteran mediator who has handled disputes between homeowners and insurers, said he charges $12,000 a day, which includes reading the submitted documents and appearing at the hearing to try to resolve the dispute.
He said smoke-damage and total-loss cases can be complicated, with disputes about materials and upgrades, the size of the rebuild and the need for foundations. The $1,500 flat fee is too low, he said.
“To get a quality mediator for that kind of money, it’s going to be very tough,” said Levinson, a mediator with Signature Resolution.
Amy Bach, executive director of United Policyholders, a San Francisco-based consumer advocacy group, said the process is helpful because it is inexpensive and can resolve disputes faster than litigation. However, there can be pitfalls.
“It’s important that the compensation be at appropriate levels to attract skilled and impartial mediators, and that the overall process be monitored for quality control,” she said.
Bach added that mediators need to ensure that policyholders are not “ganged up on” by experienced insurance company representatives during the mediation.
Chen said she feared that policyholders would be at a disadvantage during the hearing.
Soller said the department stands by the process.
Marcia Belforte, 67, relied on a mediator to deal with her insurer after her Santa Rosa home burned down in the 2017 Tubbs fire, which destroyed more than 5,500 structures in Northern California.
“I prepped for weeks and weeks on this, and I literally had my whole policy bookmarked,” Belforte said.
She said she was intimidated when the hearing started as her insurer had three representatives, but she said her knowledge of her policy prompted the carrier to ask to put the mediation on hold, intimating a forthcoming settlement.
Ultimately, she hired an attorney who extracted a payment 30% higher than what the carrier was offering, enabling her to rebuild her home.
“They didn’t have a case with me, and that’s what we found out during mediation, and that’s why it was so critical to go,” she said.
Carmen Balber, executive director of Consumer Watchdog, a Los Angeles advocacy group, said she feared that pushing hundreds of cases into mediation may allow insurers to escape discipline for any wrongdoing.
“My concern is that prematurely sending folks to mediation is going to hamstring the department’s investigation into unfair claims handling practices,” she said.
Cignarale said the department is gathering information on possible illegal practices by insurers through the complaint process, which led to the announcement last month of an investigation into State Farm General’s claims-handling practices.
State Farm, the largest home insurer in the state, has been the focus of complaints from Eaton Fire Survivors Network members, who say the insurer has resisted hygienic testing of smoke-damaged homes and offered lowball settlements for remediation.
The company also is facing multiple lawsuits related to the fires, including one filed last month by fire victims who accused the company of leaving them deliberately underinsured. State Farm denies any wrongdoing.
“State Farm takes every complaint seriously and our goal is to work with customers to resolve any of their concerns. We seek to provide every customer all benefits to which they are entitled within the terms of the insurance policy,” said company spokesperson Bob Devereux.
The department has announced the creation of a Smoke Claims and Remediation Task Force to set standards for insurers. This month, Lara appointed Cignarale to lead the panel.
[ad_2]
Laurence Darmiento
Source link -
Gov. Newsom seeks faster review of insurance rate hikes. What to know
[ad_1]
With insurers continuing to pull back from the California’s homeowners’ market, Gov. Gavin Newsom wants to speed up the process by which the companies have their requests for rate hikes reviewed.
The governor said Friday that he is backing a bill that would require the Department of Insurance to complete reviews of proposed premium increases within 60 days to halt any more exits from the market. Here’s what to know:
What exactly did the governor say?
Newsom said that immediate steps need to be taken to stabilize the market, which has seen insurers not renew existing policyholders, stop writing new policies or pull out of the market entirely — sending many homeowners to the insurer of last resort, the state’s FAIR Plan, which is now on the hook for more than $300 billion in payouts. Newsom said he was “deeply mindful” of the burdens placed on the plan.
The governor said he had considered issuing an executive order, but instead is proposing a bill that would require the Insurance Department to speed up its review process of premium rate-hike requests.
“We need to stabilize this market. We need to send the right signals. We need to move,” he said.
Isn’t there already an insurance reform package being hashed out in Sacramento?
Insurance Commissioner Ricardo Lara is holding hearings on his Sustainable Insurance Strategy, a set of comprehensive regulations intended to stabilize rates and make it more attractive for insurers to write homeowners policies, especially in wildfire areas such as hillsides and canyons.
However, these regulations won’t become law until the end of the year — a deadline sought by the governor, assuming it can be met.
“It should not take this long for emergency regulations,” Newsom said. “We can’t wait until December.”
How would this bill fit into the larger set of reforms?
Lara has reached a grand bargain with the insurance industry to make the market more attractive, though details are still being worked out.
The plan would allow insurers to include the cost of reinsurance they buy to protect themselves from large fires and other catastrophes into premium costs. It also would allow them to set rates using sophisticated algorithms to predict the risk and cost of future fires, rather than just base them on past events. It’s unclear how an insurer’s application for an expedited rate approval this year would fit into the proposed reforms.
Has Lara reacted to the governor’s proposal?
The commissioner tweeted Friday that his department has taken “significant steps forward” to implement his planned reforms but more needs to be done — and that his department is working with the governor and the Legislature “on critical budget language that keeps us on track to get the job done.”
What do consumer groups have to say?
Jamie Court, president of Consumer Watchdog, said he didn’t understand the proposal, worrying that it would be a “rubber stamp” on proposed rate increases.
He noted that Proposition 103, the landmark 1988 initiative that gives the insurance commissioner authority to review rate hikes, already mandates that they are conducted within 60 days except in certain circumstances. Those circumstances include requests for rate increases exceeding 7% for homeowners insurance, which allow consumers to seek a hearing, or the commissioner’s own decision to conduct a hearing.
What is the insurance industry’s reaction
Rex Frazier, president of the Personal Insurance Federation of California, a trade group of property and casualty insurers, said despite the promise of 60-day rate reviews under Proposition 103, they are taking longer. He said the Insurance Department will often request that insurers waive their rights to a speedy decision or face an administrative hearing, which can lead to extensive delays. However, Frazier withheld comment on the governor’s proposal until the draft language is released.
What are the next steps?
Newsom’s office will release the draft bill, which will be carried by a member of the Legislature and be included in the process for adopting the state budget, which the Legislature must approve by June 15. Newsom made his remarks Friday in outlining plans for a revised $288-billion budget, which calls for a series of cutbacks to close a nearly $45-billion shortfall.
[ad_2]
Laurence Darmiento
Source link -
Upscale Westside L.A. neighborhoods hit hard by State Farm home insurance cancellations
[ad_1]
Thousands of Californians who won’t see their home insurance renewed by State Farm this summer are homeowners in Los Angeles County, with some upscale Westside neighborhoods hit hard, according to the insurer’s recent filings with the Department of Insurance.
A majority of the insurer’s customers in neighborhoods in West Los Angeles as well as in or near the Santa Monica Mountains including Bel-Air, Pacific Palisades and Woodland Hills are going to lose their coverage.
The State Farm move affects some of the county’s toniest neighborhoods — adding another layer of expense and financial risk for homeowners in areas that were already costly and imperiled by wildfires. Older homeowners and those with comparatively lower incomes who bought when housing was much cheaper could be hard hit.
Last month, State Farm — the largest home insurance provider in California — said it would drop 72,000 property policies across the state amid a home insurance crisis. Of those, about 30,000 are home insurance policies.
Denise Hardin, president of State Farm, explained the company’s decision in a March 20 letter to Insurance Commissioner Ricardo Lara, stating that rate hikes that were recently approved by the Department of Insurance amid high inflation would be insufficient to restore the company’s financial strength.
“We must now take action to reduce our overall exposure to be more commensurate with the capital on hand to cover such exposure, as most insurers in California have already done,” she wrote. “We have been reluctant to take this step, recognizing how difficult it will be for impacted policyholders, in addition to our independent contractor agents who are small business owners and employers in their local California communities.
“A financial failure of [State Farm] will detrimentally impact the entire market,” Hardin added, “an outcome we are all trying to avoid.”
The letter also included several pages of ZIP Codes and the number of homeowners who would lose their coverage this summer.
In Pacific Palisades, according to the letter, 69.4% of the 2,342 policyholders — or about 1,600 — will lose coverage. In Brentwood, 61.5% of State Farm’s 2,114 customers there will lose their policies, or about 1,300 non-renewals.
Of the 1,805 policyholders in Woodland Hills, 60% — or about 1,090 — won’t be renewed, while in Bel-Air, 67% of 987 customers, about 660 customers, will be affected,
Orinda in Contra Costa County and Los Gatos in Santa Clara County also will see a high number of policyholders lose coverage.
As part of its assessment, the insurer looked at communities in areas prone to wildfires as well as those at risk of fires following an earthquake, which included communities such as Beverly Hills and Westwood.
Thelma Waxman, president of the Brentwood Homeowners Assn., whose 1,200 members own about 4,000 properties, said it had been a stressful time for members, and for residents living near high-risk fire zones.
Losing State Farm coverage “is the No. 1 topic of discussion” among association members, she said. “Everybody is nervous.”
Last year, the association created its first California Fire Safety Council and worked closely with My Safe L.A., a nonprofit providing fire and safety education, as well as the Los Angeles Fire Department in an attempt to reduce fire risks in the area.
Waxman said the formation of the safety council was partly in response to insurance companies dropping policyholders in the state.
“At first we thought we could get a discount,” she said, “but then it became about trying to keep our policies.”
Waxman said she’d been urging residents who will lose their home insurance with State Farm to start shopping now for a new home insurance policy as it’s difficult to find insurers writing policies in the state.
State Farm said those losing their policies would be notified between July 3 and Aug. 20.
State Assemblywoman Jacqui Irwin (D-Thousand Oaks), whose district includes many of the affected neighborhoods, expressed concern but hoped that the state could end the crisis by altering regulations to encourage insurers to “return to the business of writing policies for Californians and their properties.”
Insurance companies have cited high inflation, catastrophe exposure, the cost of reinsurance (a type of insurance for insurance companies) and the limitations posed by decades-old insurance regulations as reasons for scaling back policies in the state.
Left with no other choice, a number of Californians have turned to the FAIR Plan as a last resort. Funded by the insurers doing business in California, the Fair Access to Insurance Requirement plan provides more limited coverage as a fallback for property owners unable to find conventional policies they can afford.
But the enrollment surge is putting a financial strain on the state insurer as it faces a potential loss of $311 billion, up from $50 billion in 2018.
State officials said the FAIR Plan had a surplus of $200 million and was at risk of insolvency should a catastrophic event occur.
Lara has proposed a set of new rules that would allow insurers to raise rates to cover reinsurance costs and projected losses from catastrophic fires, but also require that they provide coverage for more homes in California’s canyons and hills.
The proposals, which aim to move people off the FAIR Plan and slow the increase in premiums, have won support from insurance industry trade groups and some consumer groups, although some consumer advocates, such as Consumer Watchdog, have criticized the proposed rules.
In the letter to Lara, Hardin said State Farm would continue to cooperate with the state in finding a resolution to the home insurance crisis.
“We are acutely aware of the political challenges that the actions needed to improve [State Farm’s] financial position pose to broader reform efforts,” she wrote. “Please know that we have an ongoing desire and commitment to collaborate with you and your staff, as well as the Governor’s office, to achieve these reforms as quickly as possible.”
[ad_2]
Ruben Vives
Source link -
California’s home insurer of last resort sees enrollment surge, raising concerns over its finances
[ad_1]
With home insurers scaling back coverage in the state, enrollment is surging in California’s backstop insurance plan — as is the plan’s risk of sustaining losses that it can’t cover.
Victoria Roach, president of the FAIR Plan Assn., told lawmakers this week that property owners even in areas with low wildfire risk were finding it difficult to keep their homes insured as companies increased rates, limit coverage or left areas susceptible to natural disasters amid climate change.
That has prompted thousands of Californians to purchase coverage through the state insurer as a last resort. Funded by the insurers doing business in California, the Fair Access to Insurance Requirement plan provides a limited policy as a fallback for property owners unable to find conventional coverage they can afford.
Roach said the Fair Plan set a new record last month when it added 15,000 new policyholders.
The FAIR plan has about 375,000 policyholders, and the insurer’s total risk exposure was $311 billion as of December 2023; it was $50 billion in 2018.
“We’re one of the largest writers in the state right now in terms of new business coming in,” Roach said. “As those numbers climb, our financial stability comes more into question.”
Roach said homeowners and businesses are typically insured by any of the state’s 118 standard insurers or 132 surplus line insurers, which specialize in high-risk insurance.
“Unfortunately, as you know with the current state of the market, I think this is often reversed because there’s not a lot of options out there for people,” Roach told lawmakers during Wednesday’s Assembly Insurance Committee. “Instead, the FAIR plan is quickly moving to be the first resort for a lot of people.”
She said consumers who would never have sought insurance through the FAIR plan in years past were now among the new policyholders, many of whom were not living in wildfire areas.
The insurer’s expansion is the latest wrinkle in California’s ongoing insurance crisis, and it mirrors a similar trend across the country of major companies dropping customers in areas prone to wildfires, flooding and hurricanes.
Florida’s state insurance of last resort, known as the Citizens Property Insurance Corp., has become the largest property insurer there, adding about 11,000 new policies in the last two weeks, according to local reports.
In Louisiana, state officials have been trying to address an insurance crisis following a series of hurricanes in 2020 and 2021 that caused insurance companies to stop renewing policies or leave the state.
Since 2022, at least eight insurers, led by State Farm and Allstate, have announced plans to stop offering home insurance to new customers or withdraw from the state entirely. Some blamed a spike in the cost of reinsurance — insurance policies that insurance companies buy to cover their big losses — and financial strains caused by inflation that have made materials and labor for home repair and rebuilding costly.
The potential loss of insurers prompted Gov. Gavin Newsom to issue an executive order commanding the insurance commissioner to take action to address issues with the insurance market and expand coverage options for consumers.
Insurance Commissioner Ricardo Lara’s response to the crisis is a set of new rules still being implemented that would allow insurers to raise rates to cover reinsurance costs and projected losses from catastrophic fires, but also require them to provide coverage for more homes in the canyons and hills. The proposals, which aim to move people off the FAIR plan and slow the increase in premiums, have won support from insurance industry trade groups and some consumer groups, but criticism from other consumer advocates.
Under the existing system, insurers need to apply to the Department of Insurance to raise their average rates across the state and prove that the price hike is justified. The process allows consumer advocates to intervene to contest the insurer’s claims.
This system was created when California voters approved Proposition 103 in 1988, but the insurance department went a couple of steps further than the ballot measure. Its rules barred insurance companies from including the cost of reinsurance in their rates and allowed the use only of historical loss data, rather than forward-looking simulations, to support a hike in premiums.
Insurance industry representatives have been trying to lift both of those restrictions for years, but their calls have intensified as insurers have pulled back coverage in California.
On Thursday, Lara proposed a regulation that would allow insurers to use catastrophe modeling that takes into account the projected impacts of climate change and other shifting factors when asking to raise rates.
“We can no longer look solely to the past as a guide to the future,” Lara said in a statement. “My strategy will help modernize our marketplace, restoring options for consumers while safeguarding the independent, transparent review of rate filings by Department of Insurance experts, which is a bedrock principle of California law.”
The proposed regulation comes a week after the Los Angeles County Board of Supervisors approved a motion demanding that Lara investigate the compliance measures that insurance companies require from homeowners to keep their coverage.
“It’s no secret that insurance providers have become more conservative due to increased wildfire threats statewide,” said Supervisor Kathryn Barger, who introduced the motion, in a statement. “As a result, homeowners are increasingly being put in a very tough position: pay higher premiums and comply with varied, costly, and inconsistent mitigation requirements or lose your insurance.”
She added: “I’ve heard from many of my constituents district wide who are facing steep cost increases or being dropped altogether by their insurance carriers and left to fend for themselves. That’s simply unacceptable.”
In response to proposed expansion of catastrophe models, Consumer Watchdog, a consumer advocacy group that often intervenes in proposed rate hikes, said Lara’s proposed regulation limits transparency.
“Black box catastrophe models are notoriously contradictory and unreliable, which is why public review and transparency are key before insurance companies are allowed to use them to raise rates,” the group wrote in a statement. “Commissioner Lara’s proposed rule appears drafted to limit the information available to the public about the impact of models on rates in violation of Proposition 103.”
The group contends that the rule fails to spell out how the Department of Insurance would assess a model’s bias or accuracy and instead creates “a pre-review process that appears primarily focused on determining what information companies must disclose and what they may conceal from public view.”
“California needs a public catastrophe model to ensure climate data is transparent and to prevent insurance price-gouging and bias.”
Staff writer Sam Dean contributed to this report.
[ad_2]
Ruben Vives
Source link -
State insurance commissioner says companies are delaying policies, denying discounts
[ad_1]
Responding to consumer complaints about auto insurance coverage, the state insurance commissioner said Thursday that insurers could face penalties for creating unlawful barriers for California drivers.
Ricardo Lara issued a bulletin to auto insurers, reminding them that they cannot change their policies’ terms and rates without formally filing for state review and approval. The bulletin also reminded companies that they must offer coverage to all motorists in California who meet the state’s legal definition of “Good Drivers.”
“These alleged passive-aggressive tactics by insurance companies to slow down drivers’ access to coverage are unacceptable, dangerous, and will not be tolerated,” Lara said in a statement. “I am taking action today to ensure these insurance companies are acting according to the law and giving drivers the coverage they are paying for at the rate they qualify for. We will continue to monitor the situation and take any and all steps necessary to protect California consumers.”
The commissioner acted in response to numerous complaints the department received about insurers imposing requirements that are not allowed by state law, including Proposition 103, the 1988 ballot measure that regulated property and casualty insurance sold in California. Issuing the bulletin, the department said, makes the legal requirements clear to insurers and “sets the stage for future enforcement actions, if warranted.”
Frustrated by state regulations, a number of insurers have limited the new policies their agents can sell in California. And for California drivers who already have policies, the challenge for many has been a sharp increase in premiums when they renew.
California drivers are now running into speed bumps to coverage because insurers say they were hurt by Lara’s pandemic-related orders, including those requiring partial refunds to policyholders who were driving less and denying approval for rate increases through most of 2022.
Big-name insurers have been saying for months that they “can’t get the rates they need from the state Department of Insurance,” said Mike D’Arelli, executive director of American Agents Alliance, a national association of independent insurance agents and brokers.
The companies complained they were losing money despite being profitable as recently as 2022, according to Department of Insurance market share data.
The complaints that reached Lara’s desk include claims that some auto insurers may not be offering “Good Driver” discounts to those who qualify. According to the department, California law requires insurers to offer a policy with such a discount to any driver who’s held a license for the last three years, has no more than one point on their driving record and was not principally at fault in a motor vehicle accident that resulted in bodily injury or death.
Consumers also have complained about “having to complete unnecessarily lengthy and/or confusing questionnaires, verify employment or school information, respond to physically mailed questionnaires despite applicants electing to receive documents electronically, provide information regarding excluded drivers living at the same address, and/or submit copies of applicants’ utility bills, vehicle registrations, and/or photos of driver’s licenses or vehicles, among other examples,” the department said Thursday.
These barriers in many cases “discourage, inhibit or delay” motorists from completing an application for insurance, especially in a timely manner, the department said.
In addition to the requirement to offer coverage to good drivers, the bulletin issued by Lara highlights the limits on what insurers can demand from applicants. “The Insurance Commissioner may initiate administrative enforcement actions and/or seek penalties against any and all insurers failing to offer and sell automobile insurance to all qualified Good Drivers,” the bulletin states.
The bulletin also reiterates that, under Proposition 103, auto insurers in California are required to submit complete rate applications to the insurance commissioner for review and approval “any time they seek to implement new, or changes to existing, programs, coverages, rates, rating factors, underwriting guidelines, rating rules, forms, and fees, or make any other changes that may have a rate impact,” even if they think there won’t be any impact, according to the Department of Insurance.
“An insurer’s failure to file proposed underwriting guidelines prior to implementing the proposed guideline may result in an administrative enforcement action against the insurer leading to restitution and/or penalties,” the bulletin says.
Proposition 103 gave the insurance commissioner the power to review property and casualty insurance premiums before they go into effect, known as a “prior approval” system. It also sharply limited the factors insurers could consider when setting rates, requiring that they show data connecting each factor to their risk of loss. The goal was to prevent insurers from setting discriminatory premiums that didn’t reflect a driver’s potential for claims. Prior to the law, insurance companies weren’t regulated.
If a requested premium increase exceeds 7%, the commissioner makes an independent determination of the allowable rate change based on data provided by the insurance company. Proposition 103 also allows consumer advocates and other third parties to intervene with their own analyses and arguments.
[ad_2]
Karen Garcia
Source link