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Opinion: Home Insurance Crisis Looms Large as California Legislature Nears End of Session

California state Capitol building
The California state Capitol building in Sacramento. File photo courtesy of Sen. Toni Atkins’ office

The California Legislature reconvened Tuesday for the final fortnight of its 2023 session with lawmakers facing nearly 1,000 pending measures ranging from consequential to toothlessly symbolic — and perhaps some still to be drafted.

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Historically, the last few days of any session are rife with rumors about phantom bills that might surface and be hustled through the process. This year’s prime topic for 11th hour legislating is the growing home insurance crisis.

Several major insurers have pulled out of the California market, or reduced their exposure, citing unacceptable risks due to massive wildfires and escalating construction costs. Legislators and other state officials, particularly Insurance Commissioner Ricardo Lara, are feeling pressure both from homeowners who are having their policies cancelled and real estate brokers because mortgages need insurance.

The insurance industry has indicated that shoring up the California market would require legislation or new rules from Lara to allow insurers to build potential future exposure into their premiums, rather than be forced to rely on past experience that may be out of date.

However, such a change would probably increase premiums and consumer activists such as Harvey Rosenfield, founder of Consumer Watchdog and author of the 1988 ballot measure that established the current insurance regulatory apparatus, are denouncing any such changes as a giveaway to the industry.

It’s doubtful that legislation seriously affecting such a complex and touchy subject could be drafted and passed in the few remaining days but no matter what happens — even if it’s nothing — the political fallout could be powerful.

Notwithstanding the buzz about insurance, there are some contentious, high-profile measures that are already on the legislative agenda for the final days, having been cleared for floor action.

One survivor is a measure that would elevate child trafficking into a serious crime, which wouldn’t seems to be controversial but became a symbol of the sharp partisan differences over crime and punishment. Democrats stalled the Republican-authored bill in committee but media coverage and pressure from Newsom sprung it from political jail, so to speak.

There’s more bipartisan support for a package of bills to confront California’s deadly epidemic of fentanyl misuse.

Labor unions are making a full-court press in this year’s session with multiple bills to make it easier to organize workers and/or expand mandatory employment benefits, such as more paid sick leave days and a sharp hike in minimum wages for health care workers.

Finally, there are two efforts, backed by Democratic leaders, that would change how measures placed on the statewide ballot by petition are framed. Both are clearly aimed at making ballot processes more difficult, thus thwarting recent efforts by business interests to block new regulations and taxes.

They are specifically aimed at three measures already qualified for the 2024 ballot, one challenging new regulation of the fast food industry, another opposing new restrictions on where oil wells are drilled and a third that would make it much more difficult to raise state and local taxes.

One law already signed, Assembly Bill 421, would change how referenda are worded for voters, and affect both the fast food and oil well referenda. AB 121 also contains an unusual passage to tightly restrict judicial challenges to the law.

The second, Assembly Constitutional Amendment 13, would require that the 2024 measure to require two-thirds votes for local taxes and voter approval of new state taxes would itself need a two-thirds vote to be adopted. Sponsors want to place ACA 13 on the March primary ballot so that it would apply to — and perhaps kill — the November tax restriction measure.

Such are the games of September.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

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