PASADENA, CA, 13 December 2023– Consumer Watchdog today called on members of the Assembly Insurance Committee to force Insurance Commissioner Ricardo Lara to answer five tough questions about the wildfire insurance deal he cut with the insurance industry and whether it will benefit consumers or insurers. Commissioner Lara will testify about his plan at an Assembly Insurance Committee oversight hearing this afternoon.
Commissioner Lara announced a deal with insurers and a regulatory plan in September that he said would expand homeowners insurance coverage for Californians. The centrepiece of the plan was a supposed “85% commitment” by insurers to increase insurance sales in wildfire areas. However, documents obtained by Consumer Watchdog under the Public Records Act show that the legislation underlying his plan would not require insurers to provide comprehensive homeowners insurance to a single new homeowner.
The top five questions that members of the Assembly Insurance Committee should ask Commissioner Lara are
Will you allow insurance companies to meet their “85% obligation” by selling bare-bones policies like those consumers already have access to in the FAIR Plan, or will you require them to sell the full-benefit policies Californians need?
Will you waive the 85% Commitment for any insurer that claims they cannot meet it?
When will your promised mitigation discounts for homeowners who harden their homes and clear brush be approved and begin to benefit consumers?
Will you support a mandate that insurers sell coverage to any existing homeowner who protects their home from fire?
Will you support the creation of a public catastrophe model in California so that insurers cannot hide the information we need to ensure that the models’ predictions of fire risk are accurate and that they treat consumers fairly?
“Is the insurance commissioner finally ready to prove how his plan will give a single new homeowner in California access to insurance? The only evidence we have – bill language circulated by his top deputy – says that promise is false,” said Carmen Balber, executive director of Consumer Watchdog. “Will the committee support a requirement that insurers offer coverage to all homeowners who meet the state’s wildfire mitigation guidelines? That’s the only way to ensure that homeowners remain insured and reduce the risk of wildfires throughout California.
The public documents detailing the Commissioner’s legislative plan, obtained by Consumer Watchdog, show that
Insurers would be allowed to meet the only consumer benefit of the deal – their “commitment” to expand homeowners’ coverage in wildfire areas to 85% of their market share outside at-risk areas – by offering the same high-cost, limited-benefit coverage that homeowners already have guaranteed access to today under the FAIR plan.
The Commissioner could waive the “85% obligation” altogether for any insurer that claims it cannot meet it.
The bill’s other provisions to facilitate unjustified rate increases mean that consumers will not be able to afford the policies that insurers are willing to sell.
This year, the Assembly Insurance Committee refused to hold a hearing on legislation that would have required insurance companies to sell to homeowners who meet home hardening and brush clearance guidelines, Senate Bill 672 by Senator Mike McGuire.
The poll found broad support for this requirement: 77% in favour and 15% opposed – with broad support across gender, party, age, income, housing type and region. By contrast, Insurance Commissioner Lara’s plan to allow insurance companies to raise premiums for all Californians in exchange for a promise to insure homeowners in higher wildfire risk areas is opposed by a 2 to 1 margin, with 62% opposed to 30% in favour. Only 9% of voters strongly support the idea.
The poll of 639 likely November 2024 voters was conducted for Consumer Watchdog by FM3 Research, directed by Paul Maslin and Rick Sklarz, from 26 to 30 October.
