FRESNO, Calif. (FOX26) — As we reported last week, home insurance rates are going up for 200,000 California households insured by Allstate.
The California Department of Insurance allowed the rate increases as it called on the insurer—and others—to write new policies.
Proposition 103, which was passed by voters in 1988, allowed insurance companies to choose where to write policies and their rates—which would then be approved by the Department of Insurance.
But Deputy Insurance Commissioner Michael Soller says this didn’t come with a requirement for insurers to actually write more policies.
Soller says this needs to change—especially in areas considered high-risk, where the state’s last-resort FAIR plan has become the only insurance available.
“Once of the critical things that we’re doing this year is for the first time in California history, insurance companies are agreeing that they’re going to take on higher risk homes,” Soller says. “And that means the homes that are up by Shaver Lake, the homes that are in the hills, that are out really outside of the urban core, because that’s where some of the biggest problems are happening.”
Soller says deferred decision-making isn’t the only issue holding back the industry.
He says delays on forest management and home safety have also affected rates.
What’s more—Soller says California is the only state that requires insurance companies to use historical data to set rates.
“You can’t really look in the rearview mirror to make decisions about what’s going to happen in the future,” he says.
Now, Insurance Commissioner Ricardo Lara’s office is looking at modern catastrophe modeling – using technology to better understand future risk—with transparency as a requirement.
“That’s gonna help us to keep rates more sustainable, more stable so folks don’t see 100 percent or 200 percent jump year over year,” Soller says. “It’s really about how do they estimate the future losses that so that they can have the proper rates to pay the claims and ultimately that is what we you know that is the other big part of our job. We want to make sure insurance companies stay solvent, they have the wherewithal to pay future claims.”
He says the accurate modeling and pricing should entice insurers to write more policies – leading to increased competition.
Consumers could see the benefits by the start of 2025.
“On January 1st, the message to the insurance industry is we’re open for business in California, come in, tell us where you’re going to write policies and let’s get going,” Soller says.
The California Department of Insurance is holding a virtual, public hearing to look at propose regulations on Catastrophe Modeling.
You can read more about the issue here and submit written comments to CDIRegulations@insurance.ca.gov
Soller says California recently created the first insurance discount for wildfire safety in the United States.
Families in mountain communities could be eligible for a FIREWISE U.S.A. discount by following a ten-point list that was created with the help of Calfire.
You can find more information here.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.