Top Five Questions Insurance Commissioner Ricardo Lara Must Answer About his Wildfire Insurance Plan

News provided by

Dec 13, 2023, 13:03 ET

PASADENA, Calif., Dec. 13, 2023 /PRNewswire/ -- Consumer Watchdog today called on members of the Assembly Insurance Committee to make Insurance Commissioner Ricardo Lara 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 before an Assembly Insurance Committee Oversight Hearing this afternoon.

Commissioner Lara announced a deal with insurers and plan for regulations in September that he said would expand home insurance coverage for Californians. The center of the plan was a supposed "85% commitment" by insurers to increase insurance sales in wildfire areas. However, documents Consumer Watchdog obtained under the Public Records Act reveal that the legislation his plan is based on would not require insurers to offer comprehensive home insurance to a single new homeowner.

The top five questions Assembly Insurance Committee members should ask of Commissioner Lara are:

Will you allow insurance companies to meet their "85% Commitment" by selling bare-bones policies like those consumers already have access to at the FAIR Plan, or will you require they sell the full-benefit policies that Californians need?
Will you waive the "85% Commitment" for any insurer that claims it cannot meet it?
When will the mitigation discounts you promised for homeowners who harden their homes and clear brush be approved and start benefiting consumers?
Will you support a mandate that insurers sell coverage to every existing homeowner who protects their home from fire?
Will you back the creation of a public catastrophe model in California so insurers cannot hide the information we need to make sure 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 get a single new homeowner access to insurance in California? 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 back a requirement that insurers offer coverage to all homeowners who meet state wildfire mitigation guidelines? That's the only way to guarantee we keep homeowners insured and reduce wildfire risk across California."

The public documents detailing the Commissioner's legislative plan and obtained by Consumer Watchdog show:

Insurers would be allowed to meet the deal's only consumer benefit - their "commitment" to expand home insurance coverage in wildfire areas to 85% of their market share outside risky areas - by offering the same high cost, limited benefit coverage that homeowners are already guaranteed access to in the FAIR Plan today.
The commissioner could waive the "85% commitment" entirely for any insurer that claims it cannot meet it.
The bill's other provisions to facilitate unjustified rate hikes mean consumers will be unable to afford the policies insurers are willing to sell.

View the documents and an analysis of their contents.

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.

Polling found broad support for this requirement: 77% in support and 15% opposed – with broad support across gender, party, age, income, residence type and region. In contrast, Insurance Commissioner Lara's plan to allow insurance companies to increase 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, 62% opposed to 30% in support. Only 9% of voters register in strong support.

The poll was conducted among 639 likely November 2024 Voters by FM3 Research, headed by Paul Maslin and Rick Sklarz, from October 26 through October 30 for Consumer Watchdog.

SOURCE Consumer Watchdog