By SARAH SHMERLING | Editor-in-Chief
The office of Assemblymember Jacqui Irwin—who represents AD 42, which includes Pacific Palisades—hosted a Wildfire & Disaster Insurance Online Town Hall on April 4.
The town hall was co-hosted by Irwin, Insurance Commissioner Ricardo Lara and Las Virgenes-Malibu Council of Governments. Guests that took part included Calabasas Mayor Alicia Weintraub, Agoura Hills Mayor Pro Tem Penny Sylvester, California Department of Forestry and Fire Protection, and United Policyholders.
The town hall came on the heels of news that State Farm General Insurance Company would “non-renew” approximately 30,000 homeowners, rental dwelling and other property insurance policies (residential association and business owners) across California, including in the Palisades. The non-renewals will occur on a rolling basis, State Farm said in a statement, beginning July 3.
“Throughout the past year, the insurance industry has been in a state of flux,” Irwin said at the start of the town hall. “Many constituents have contacted my office, worried and upset about this issue.”
“Major companies” are “refusing” to write new homeowner policies in California, Irwin continued, and non-renewal notices are being issued—affecting homes in very high fire zones and beyond. Homeowners have turned to “non-admitted” insurers and the California FAIR Plan, which was “supposed to be the insurer of last resort,” providing “less coverage for more money.”
“While insurance companies are private businesses and they’re not obligated to write policies, the commissioner, along with our governor, have put together a plan for a sustainable insurance strategy that they will now implement,” Irwin explained.
Lara spoke next, explaining California Department of Insurance’s goal is to “safeguard the integrity of the state’s insurance market.”
“As the insurance commissioner,” Lara explained, “I hold insurance companies accountable, and make sure that they’re financially solvent and that they meet the needs of the consumers.”
Lara assured attendees that if a non-renewal notice is issued, consumers would not be dropped from policies immediately and left without coverage, which is against consumer protection laws. Customers must be given time to explore options and find alternate coverage, Lara said, and the department has “experts ready to assist” consumers find that coverage, whether that is through the FAIR Plan or competitive market.
He addressed the fact that prices have “increased nationally” and that “we need to get back to a point where insurance companies are competing for your business to drive down the cost.” California prices are “way lower” than Texas and Florida, but as “the risk continues to increase,” “insurance is becoming unaffordable for many Californians.”
The department’s goal, Lara explained, is to create a “modern, sustainable insurance market,” which “incentivizes safety and reduces risks,” that “does not retreat from high risk areas,” but instead “utilizes long-term strategies to continue to provide coverage to consumers.”
This approach includes three components, according to Lara: streamlining the rate application process (the insurance department reviews rates to make sure consumers are “getting the best value” for their money), introducing risk management tools (including catastrophe modeling instead of historical data, and factoring in discounts for home hardening efforts), and strengthening and depopulating the FAIR Plan.
“The way we’re going to get availability and increased access to coverage is by finally addressing these tools that we keep talking about that the insurance companies need to be able to better assess the risk that currently they don’t have access to,” Lara said.
Lara said later in the meeting that he committed to the legislature and to the governor that the department would get these regulations done by December 2024, which means they will “hopefully [be] fully implementable by the end of the year.”
There will be public hearings on the regulations in the coming months. He encouraged residents to “join the conversation” and share their insurance experiences.
“Under this really historic agreement, working with the insurance companies, they have committed that if we get these regulations done, they are going to write 85% of their business in areas like your communities,” Lara said. “We are currently mapping that out per zip code, so that if your community has a penetration rate of 15% of the FAIR Plan, you are a priority zip code.”
Amy Bach, director of United Policyholders (uphelp.org)—a “consumer advocacy nonprofit”—spoke next.
“We offer trustworthy plain language info and expertise on buying home insurance and navigating claims after a loss,” Bach explained. The group “closely monitors the property insurance marketplace.”
“A lot of my goal here is to try to help stave off panic, I hope you got that vibe as well from the commissioner,” Bach said. “We’re not here with a smiling face, but we’re here to say that you do have options. His sustainable insurance strategy aims to increase those options.”
Bach said United Policyholder’s advice when it comes to securing an insurance policy is to work with a “good agent or broker,” someone who is “hustling, finding options and staying on the case.”
“The market has little pockets here and there of availability,” Bach explained, “it’s just a matter of figuring out what’s a match for you.”
For those who are being dropped from their policies, Bach explained that insurers are required to give at least 75 days notice. The insurance company also must tell consumers their risk score as well as offer an appeal process for improving the score.
“Start shopping right away is probably one of the most important things I can say about what to do when you get non-renewed,” Bach said. “If the FAIR Plan is your only option, then you can put the policy in place but keep shopping because the market has still got some play in it.”
There are four types of insurance companies: admitted/licensed (name brand, like State Farm), non-admitted/surplus/excess, government sponsored (the California FAIR plan), and forced/lender-placed.
“This is always, of course, your best option if you can,” Bach said of admitted/licensed insurers.
Non-admitted insurers do not participate in the CA Insolvency Guaranty Fund (so there is a risk of them running out of funds), and their rates and policy forms are not regulated by California Department of Insurance.
“For a lot of people, it’s the best of the worst option right now,” Bach explained.
Lender-placed policies are used when residents have a mortgage and their insurance lapses. Bach explained these policies are “very expensive for the coverage” and they typically only cover the amount of the loan.
Bach then touched on different things homeowners could do, including reducing/eliminating non-essential coverages while staying properly insured, creating a home inventory and helping make communities Firewise/fire safe.
“I think there’s better skies ahead,” Bach said of the future of insurance in California, “but there is no question that we are going to be paying more for home insurance going forward. The question is we need to keep it fair and reasonable.”
A recording of the April 4 town hall will be available on Irwin’s website: a42.asmdc.org. Irwin’s website also has a list of non-renewal resources and tips: a42.asmdc.org/non-renewal-homeowner-insurance. Additional information can be found at insurance.ca.gov, or by calling 800-927-4357 or emailing crob@insurance.ca.gov.
