California insurance commissioner defends bill in face of strong opposition
California Insurance Commissioner Ricardo Lara on Wednesday defended a bill that would make broad changes to insurance coverage after a home is destroyed in a wildfire or other disaster, which is facing stiff opposition from industry lobbyists.
“Do you really think I would once again put my department, my staff, or myself through the political attacks, the personal pressure, if I believe that this bill would actually harm the market?” Lara said during a Senate Insurance Committee hearing. “Of course not.”
Californians across the state for years have faced delays and obstacles while trying to resolve claims, rebuild their homes or find new places to live after disasters. Those issues are facing increased attention and scrutiny following the decimating wildfires in Southern California last year.
Senate Bill 876 aims to speed up and ease that recovery process by requiring insurance companies to provide more coverage in certain instances, make payouts within 30 days after a home is destroyed and assign employees to be primarily responsible for claims, among an array of other changes.
“Everything that this bill takes aim at are the exact same problems that consumers have been bringing to our organization,” said Amy Bach, the executive director of United Policyholders, a consumer advocacy group.
The insurance committee voted to move the bill forward, but not before its author, Sen. Steve Padilla, D-Chula Vista, agreed to remove a proposal that would have required companies to offer coverage that guaranteed paying the cost of repairing or replacing a damaged or destroyed home.
“The broad intent here,” Padilla said, “is to bring the claims process for people who are suffering the worst experience of their lives into the 21st century.”
For years, insurance companies have restricted business and not renewed homeowner policies in response to catastrophic fires and rising risks of more destructive blazes in the future. Denni Ritter, a lobbyist with the American Property Casualty Insurance Association, warned the bill could “reduce flexibility in an already fragile insurance market” and increase the cost of coverage, even after the amendment was accepted by Padilla.
“We’re really concerned about the cumulative and unintended consequences,” she said.
Lara acknowledged that the bill would likely increase costs for companies, especially after a wildfire, but said he wanted to encourage a dialogue with legislators, insurance companies, consumer groups, and his department to “figure out what are the things that we’re willing to do to increase consumer protection, and really be open about how this is gonna impact the market.” Seren Taylor, a lobbyist for the Personal Insurance Federation of California, said the measure had opened the door to “constructive conversations,” but added that “there is a lot more work to be done.”
The bill has to make it through several other committees before it will appear in front of the entire Senate.
