‘It’s truly a crisis’: Placer County calls on Governor Gavin Newsom to quell insurance market
Placer County leaders have called on Gov. Gavin Newsom to help stabilize the insurance market, which they say has made it more difficult for residents and businesses to afford coverage.
The Placer Board of Supervisors last week approved sending Newsom a letter requesting he declare a state of emergency for homeowners and commercial property insurance amid worsening wildfire conditions statewide that have led to insurance providers not offering coverage or raising their rates to unsustainable levels.
The letter to the Governor’s Office and Insurance Commissioner Ricardo Lara asked for the state to “take immediate emergency regulatory and legislative action to strengthen and stabilize California’s marketplace for homeowners insurance and commercial property insurance.”
The supervisors said more than half the Placer County residents who responded to a July survey reported their homeowners’ policies were either not renewed or had significantly higher premiums.
“We’re all well aware of the critical impacts the loss of insurance has on homeowners and now businesses, as well,” said supervisor Cindy Gustafson, who represents eastern Placer County to the Tahoe Basin. “It’s truly a crisis. Placer County, we believe, is the top county in the state for non-renewals. I know that our county and our residents are doing everything they can and they want to do more. But they need to have that recognized. If they’re going to harden their homes, and do their defensible space, they need insurance breaks.”
A number of insurance providers have exited the California market, cut back their policies or tightened underwriting standards in recent years. State Farm, one of California’s largest commercial insurers, announced in the spring it would not renew 72,000 commercial apartment policies beginning this summer, which followed a decision to stop accepting new applicants for property and business policies. That followed a 20% rate hike for the company’s homeowner insurance policies.
A report from the Placer County supervisors suggested the scarcity of insurance options is “exacerbating the State’s housing affordability crisis and has profoundly affected those who are the most vulnerable, including those on fixed incomes and young families.”
“Our administration, in partnership with the Insurance Commissioner’s Office, is actively overhauling the insurance system — having rolled out measures to help address this crisis and continuing to work on initiatives that will protect homeowners,” said Alex Stack, a spokesman for the Governor’s Office. “And we’re doing this on an accelerated timeline, with the governor calling for swift regulatory action to strengthen and stabilize California’s marketplace.”
Lara and his department have been working to institute rule changes to stabilize the state’s insurance market and it was on track to complete the revisions by the end of the year. The goal was to spur insurance companies to write more policies and provide homeowners with more options. A plan announced in September 2023 included pushing insurance providers to take on more customers in high-risk areas in exchange for using catastrophe models to set premiums.
Those unable to secure insurance coverage have been led to the California FAIR Plan, which is the private insurer of a last resort. The Placer supervisors argue the reduction of third-party coverage over the past five years is “threatening the ongoing stability of this state-established risk pool,” according to the resolution’s staff report.
This story was originally published September 16, 2024 at 12:51 PM.
