XPost: alt.business.insurance, alt.home.repair, sac.politics   
   XPost: talk.politics.guns   
   From: you-will@assholes.com   
      
   New rules in California mean a 50% policy increase because Democrats   
   failed to do their jobs.   
      
   Commissioner Lara issues landmark regulation to expand insurance access   
   for Californians amid growing climate risks   
   Measure is final major step in historic reform to expand insurance   
   coverage across California   
      
   SACRAMENTO, Calif. — Insurance Commissioner Ricardo Lara today announced   
   the final major step in his Sustainable Insurance Strategy, issuing a   
   historic regulation aimed at restoring stability to California’s insurance   
   market while addressing the growing risks of wildfires and climate change.   
   The new Net Cost of Reinsurance in Ratemaking Regulation requires   
   insurance companies — for the first time — to increase coverage in high-   
   risk areas, ensuring more options for Californians while limiting the   
   costs passed on to consumers. The regulation works hand-in-hand with other   
   reforms that Commissioner Lara has spearheaded that will have the effect   
   of increasing insurance coverage options for Californians across the   
   state.   
      
   “Californians deserve a reliable insurance market that doesn’t retreat   
   from communities most vulnerable to wildfires and climate change,” said   
   Commissioner Lara. “This is a historic moment for California. My   
   Sustainable Insurance Strategy is focused on addressing the challenges we   
   face today and building a resilient insurance market for the future. With   
   input from thousands of residents throughout California, this reform   
   balances protecting consumers with the need to strengthen our market   
   against climate risks.”   
      
   Reinsurance is a financial tool that is part of how insurance companies   
   manage their risk portfolios associated with the policies they write to   
   homeowners and business owners. Its roots date back to the 14th century,   
   when merchants and traders sought ways to spread the risks of perilous   
   ocean voyages, often relying on multiple insurers to cover their ventures.   
   Today, as climate risks escalate across the nation, reinsurance has become   
   an even more imperative component of insurance companies operating in   
   high-risk and distressed areas, including California. Modernizing   
   regulations around reinsurance will enable insurance companies to expand   
   coverage and write more policies in communities across the state facing   
   greater risk, ensuring stability and resilience in our insurance market.   
      
   All other states except California allow for costs of reinsurance in rates   
   and, in 2023, the first systematic review of climate risk strategies by   
   Ceres and the California Department of Insurance revealed that reinsurance   
   is the primary strategy most insurance companies use to continue to write   
   and expand coverage in higher risk parts of California and across the   
   country.   
      
   What it means: Insurance companies must increase coverage in wildfire-   
   prone regions, ensuring they write policies for at least 85% of their   
   statewide market share, with annual increases until the threshold is met.   
      
   More coverage for Californians in wildfire-distressed areas: All   
   homeowners insurance companies must increase the writing of comprehensive   
   policies in wildfire distressed areas equivalent to no less than 85% of   
   their statewide market share, whereas there is no current legal   
   requirement today for insurers to provide any coverage in high-risk areas.   
   Companies will have to continue to increase by 5% every two years until   
   they meet this threshold.   
      
   Cost caps: The regulation treats reinsurance like other insurance company   
   expenses allowed under Prop. 103 today — such as claims handling or agent   
   commissions — by establishing an industry-wide standard cost of   
   reinsurance and capping the amount of reinsurance costs that can be   
   charged to consumers. Companies spending more than the industry standard   
   cannot pass these costs onto their policyholders.   
      
   Greater efficiency: Establishing a standard cost based on an index of what   
   insurance companies spend encourages them to be efficient and compete for   
   the best price for reinsurance, so consumers get the best value.   
      
   California-only costs: The regulation limits costs to California-only, so   
   consumers do not pay for the cost of Gulf Coast hurricanes or Midwest   
   windstorms.   
      
   Reliable rates: The regulation goes hand-in-hand with forward-looking   
   wildfire catastrophe models that can better predict future rates. Under   
   the current system of historical data, insurance consumers are paying   
   balloon premiums and rate spikes after major wildfires, without increased   
   availability.   
      
   Prevents “model-shopping”: “Model shopping” describes when insurance   
   companies choose one model that produces higher rates for consumers, and   
   another that lowers their reinsurance costs. To prevent model shopping,   
   the regulation requires insurance companies utilize the same model for   
   both. This promotes more consistent approaches to assessing risks, and   
   balances the scales for consumers.   
      
   Largest insurance reform in 30 years: The new regulation is the final   
   major element of the largest insurance reform in 30 years for California.   
   The Department held multiple workshops and hearings in 2024, including a   
   meeting on December 5 which was attended by more than 500 people and   
   received 70 verbal and written comments which helped shape this   
   regulation. Commissioner Lara has met with tens of thousands of   
   Californians in all 58 counties across the state since taking office as   
   well as testifying at four legislative briefings about his Sustainable   
   Insurance Strategy over the past year.   
      
   Commissioner Lara announced on December 13 that he had finalized a   
   wildfire catastrophe modeling regulation with a requirement for insurers   
   to increase their policy offerings in underserved areas of the state as a   
   condition of incorporating catastrophe modeling into ratemaking. These two   
   regulatory efforts work together, with other Sustainable Insurance   
   Strategy reforms, to increase the availability of homeowners and   
   commercial insurance policies in wildfire distressed areas.   
      
   Led by Insurance Commissioner Ricardo Lara, the California Department of   
   Insurance is the consumer protection agency for the nation's largest   
   insurance marketplace and safeguards all of the state’s consumers by   
   fairly regulating the insurance industry. Under the Commissioner’s   
   direction, the Department uses its authority to protect Californians from   
   insurance rates that are excessive, inadequate, or unfairly   
   discriminatory, oversee insurer solvency to pay claims, set standards for   
   agents and broker licensing, perform market conduct reviews of insurance   
   companies, resolve consumer complaints, and investigate and prosecute   
   insurance fraud. Consumers are urged to call 1-800-927-4357 with any   
   questions or contact us at www.insurance.ca.gov via webform or online   
   chat. Non-media inquiries should be directed to the Consumer Hotline at   
   800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.   
      
   https://www.insurance.ca.gov/0400-news/0100-press-   
   releases/2024/release065-2024.cfm   
      
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