Insurance commissioner hosts fire insurance town hall in California

Nearly every week, a Nevada County homeowner goes public with a lament that has become all too common: their insurance company has sent them a notice of non-renewal.

Desperate homeowners share stories of being turned down by insurance company after insurance company and having to resort to the California Fair Plan for coverage, at vastly inflated rates.

As a testament to how many locals are affected by the lack of availability and affordability of fire insurance, about 500 people showed up Thursday to a town hall featuring state Insurance Commissioner Ricardo Lara. More than 3,600 people watched at least some portion of the Facebook Live stream on the county’s website, with more than 5,500 tuning in to The Union’s live coverage.

Lara came to Grass Valley along with a “Strike Team” fanning out to areas affected by non-renewal and lack of insurance availability, after meeting with county officials earlier this month. California Department of Insurance staff members were on hand throughout the event to talk to residents and connect them with resources.

Lara presented some grim statistics in his presentation, as he explained the origin of the insurance crisis. It all comes down to increased risk from the mega-fires California has sustained in the last few years, he said, noting 10 of the 20 most destructive fires in state history occurred in the last three-plus years.

Complaints to the California Department of Insurance related to non-renewals have increased 600 percent since 2010 in areas with increased wildfire risk, Lara said. Insurance companies have filed more than 100 rate increase requests to the state in 2017 and 2018, more than double the filings from the previous two years.

All the rate increases that have been approved were reviewed by Department of Insurance staff and found to be justified, Lara said.

But, he argued, there are issues the state wants to address regarding current non-renewal and underwriting laws. Homeowners who have suffered a partial or total loss now have better protections. But those who live in high-risk areas are only entitled to a 45-day non-renewal notice, which Lara called insufficient and unfair, suggesting 180 days as more appropriate.

Lara said insurers are not taking into account the length of time a homeowner has been with them or the mitigation measures they have taken to “harden” their home against wildfire risk. The problem is that there are no clear statewide standards for fire-resistant structures or for Firewise communities, he said, adding the state wants to work with insurers, first responders and communities to set those standards and lessen the overall risk for insurers and homeowners.

“Consumers should be able to rely on their coverage,” Lara said.

Getting proactive

According to Lara, some of the steps his office has already taken include requiring insurers to provide data regarding fire losses and how they assess risk, as well as providing more detailed information when they file for a rate increase.

While the state department of insurance does not have the authority to stop insurers from dropping homeowners who have done fire-wise mitigation, Lara said his hope is that will change.

“We’re asking for that authority,” he said. “We want companies to have to write those policies.”

The state also wants to ensure that homeowners displaced by wildfires — even if their homes are intact — are entitled to extended living expenses, Lara said. He cited Paradise residents who were denied those benefits because the insurance companies told them they could move back in.

“How can you do that without water or electricity or septic systems?” Lara asked. “You can’t move back.”

The California Fair Plan, Lara said, is anything but fair, telling the audience he would like to see the plan increase policy and guarantee limits.

Deputy Commissioner Tony Cignarale and Special Counsel Joel Laucher took turns answering some of the questions received beforehand. A number of audience members recounted instances where their insurance was canceled even after they mitigated the fire danger around their home.

“Those are the issues we want to work on,” Cignarale said. “If you harden your home and the community mitigates, the insurance companies should agree to write those policies. That’s the end goal. It’s not a short term goal, it will take some work … They don’t underwrite one home at a time. That’s why community efforts are so important.”

Laucher repeatedly urged homeowners to shop around, citing the 50-plus insurance companies listed on the department’s website.

“What you’re left with is doing what is within your control,” he said. “Make it the best mitigated property you can as you shop around. … Don’t give up too easily on shopping — it’s a process.”

Source: The Union