Governor Newsom supports insurance reform proposal
What you need to know: Measure would get more insurance coverage options for Californians in areas particularly threatened by wildfires, which follows Governor Newsom’s executive order and legislative proposal to strengthen the market for consumers.
SACRAMENTO — A new draft regulation announced today by California Insurance Commissioner Ricardo Lara will require that insurers that use new catastrophe modeling must write more policies in distressed areas, with larger insurance companies required to insure properties in distressed areas at a rate equal to 85% of the insurer’s statewide market share. This is part of the Commissioner’s Sustainable Insurance Strategy, a package of reforms to strengthen California’s marketplace and maintain strong consumer protections.
“This is another critical action to help fix California’s decades-old insurance crisis. It will help homeowners who face higher threats of wildfire get the coverage they need, while also easing pressure off of the state’s FAIR Plan. As the climate crisis has rapidly intensified, the insurance system hasn’t been seriously reformed in 30 years – this is part of our strategy to strengthen our marketplace and get folks the coverage they need.”
Governor Gavin Newsom
Last year, Governor Newsom called for swift regulatory action to strengthen and stabilize California’s marketplace with a focus on creating a better rate approval process, building a stronger FAIR Plan, and accelerating the implementation of regulations.
Just last month, the Newsom Administration released a proposal to increase the transparency and speed of rate change application approval timelines, while remaining consistent with Proposition 103’s consumer protections from excessive, inadequate, and unfairly discriminatory insurance rates.
Insurance rates nationwide have been on the rise due to the impacts of the climate crisis. California rates have been below the national average and significantly less than some other states, with the average yearly cost for $300,000 homes at:
- California – $1,405
- National – $2,601
- Texas – $3,851
- Florida – $4,419