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California Considers New Rules to Stop Insurers From Fleeing the State

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Officials including Governor Gavin Newsom are working to stabilize the state’s insurance market. In an attempt to keep insurers in California, the state will allow insurance companies to consider climate change when setting prices. Unlike other parts of the country, California regulations do not let insurance companies consider future or even current risks when deciding prices, the Associated Press .

In response to these challenges, California Insurance Commissioner Ricardo Lara announced that California will allow insurers to consider future risks when setting rates for insurance policies. However, this will only happen if insurance companies agree to write more home insurance policies, including for customers in at-risk areas, including areas with wildfire risk. “We are at a major crossroads on insurance after multiple years of wildfires and storms intensified by the threat of climate change.

I am taking immediate action to implement lasting changes that will make Californians safer through a stronger, sustainable insurance market,” said Commissioner Lara. “The current system is not working for all Californians, and we must change course. I will continue to partner with all those who want to work toward real solutions.

” Governor Newsom also announced that he had , prompting Lara to stabilize the insurance market. The order asked that the commissioner expand home insurance choices for consumers. Under the new rules, the California Department of Insurance will require insurance companies to write no less than 85% of their market share in high wildfire-risk areas.

Those insurance companies must also help customers who had to turn to the California FAIR plan return to the regular market. The FAIR plan is considered a last resort for state homeowners and business owners, the Sacramento Bee . The rule changes could mean higher prices for homeowners in California.

Several insurance companies that do business in the state have already requested rate increases of more than 20%, the . However, this will not affect every customer. A home in a high-risk area could see a sharp rate increase while another may not see change in their pricing at all.

It’s important that California officials modernize the process for working with insurance companies. Wildfires have always been a fact of life in that part of the U. S.

, but the climate crisis has that have fueled more destructive wildfires. Rising risks and costs have prompted seven top insurance companies to pause or begin restricting new business in California, the Associated Press . This past May, that it had for business and home insurance in the state due to wildfire risk and rising costs.

Before it stopped accepting new applications, State Farm was the leading home insurer in the Golden State , to the Insurance Information Institute. In late 2022, Allstate on new home insurance policies. In an email to Earther this past June, a representative confirmed that the decision was due to rising costs.

“The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums,” the email said. .


From: gizmodotech
URL: https://gizmodo.com/california-considers-new-rules-to-keep-insurers-1850866288

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