In what many call a homeowners insurance crisis, frustrated homeowners who have lost coverage or seen massive premium hikes, along with consumer advocates, are criticizing a proposed new plan that state regulators believe will bring insurance companies back to California before the start of the new year.
For Gigi Bannister and her husband, the crisis has been very personal.
She and her husband planned on retiring to their cabin in the mountains of San Bernardino County, but when their homeowner insurer dropped coverage on the Crestline home in 2019, they were left with few options and a much larger bill.
“My mortgage is now over $2,000 a month and $1,600 of it is insurance,” Bannister said Tuesday at a press event in downtown L.A. “I don’t know how you call that fair but it’s not the American dream.”
Chatsworth resident Bruce Breslau said his HOA community of 290 owners was dropped by its insurer after 20 years, forcing the residents to opt for an unregulated insurance option.
“We have 50% of the coverage we had last year,” he explained. “However, the premium went from $349,000 to $1.7 million. That’s a 400% increase.”
Experts say factors like the increased risk of wildfires have sent the state’s homeowners insurance market into crisis.
California Insurance Commissioner Ricardo Lara, who was in L.A. on Tuesday speaking to an oversight committee, heads the department tasked with bringing stability back to the market.
He believes the proposed new regulations that are already in the works will bring much-needed relief to homeowners.
“We understand, we see you, we hear you and we know everybody is hurting,” Lara told KTLA’s Lauren Lyster. “We need these regulatory reforms to be able to get insurers back into these communities and bring down the cost.”
However, Jamie Court, president of the nonprofit group Consumer Watchdog, says the new rules fall short and contain far too many loopholes in favor of insurance companies.
California regulators say that under the proposed new rules, insurance companies will commit to cover high-risk homes in wildfire areas for the right to use catastrophe modeling technology to assess risk as they write plans and determine rates.
Critics say the climate models are not nearly as transparent as they need to be and that the requirements placed on insurance companies are not strong enough.
“These regulations are not going to get people more coverage,” Court added. “We’re all going to be paying more in insurance premiums, a lot more in insurance premiums.”
In response to the criticism, the state insurance commissioner did not hold back.
“It’s a lie,” Lara said. “The Department of Insurance has every authority to hold insurance companies accountable for the agreement we have reached, which is really a historic agreement.”
State officials plan to finalize all the new regulations by the end of the year, with the new rules going into effect on Jan. 1, 2025.
More information about the wildfire catastrophe modeling regulations can be found here.