I just came to say the same thing!
“I face the task of regulating an insurance market operating under outdated regulations that have not been significantly reformed since the passage of Prop 103 in 1988,” Lara said at the meeting. “This outdated regulatory structure has hindered insurers from actively reflecting the true cost of doing business in California.”
The video with the public adjuster is worth watching.
Copilot gpt summary:
California’s insurance regulators have provisionally approved State Farm’s request to raise homeowners’ insurance premiums by an average of 22%, citing the need to address financial challenges following devastating wildfires in Los Angeles County. This increase is part of an effort to stabilize the company’s finances, which have been strained by over $7 billion in claims from recent fires.
The approval comes with conditions, including a public hearing to justify the rate hike and a requirement for State Farm’s parent company to provide a $500 million capital infusion. Consumer advocacy groups have raised concerns, estimating the hike could cost homeowners an additional $600 annually. The decision reflects broader challenges in California’s insurance market, where wildfire risks have led some insurers to stop issuing new policies.
You can find more details here.
Wait, he KNOWS that the department will not allow insurance premiums that are sufficient to cover all the losses?
For the “news that will surprise no one” file:
I read this and I found it confusing.
The plaintiff attorney seems to be miscategorizing the problem, IMHO.
The CalFAIR plan is now in a position where it needs to surcharge all the non-wildfire area risks for all the wildfire losses. I can totally see why people who don’t live in wildfire prone areas have an issue with a blatant subsidization of people with higher risk than themselves, especially since this subsidy will be thousands of dollars to the typical insurance buyer.
There’s plenty of places to point the finger at for this: the state. the legislature. the department of insurance. the commissioner. the governor.
But you are blaming the insurance companies that take a couple of pennies on the dollar to process the policies and write checks but don’t actually take risk nor potential profit from the plan?
And the insurance companies you accuse of profiteering are scrambling for the exit door?
The Consumer Watchdog people believe that insurance companies should just pay for things w/o charging an actuarially sound rate.
Because we have “Surplus”.
Their focus isn’t about any sort of matching the costs of the coverage with the premiums charged . . . whether on the book of business as a whole or by individual risk characteristics . . . their focus is strictly on having “low cost insurance” for people to buy.
And the FAIR plan is essentially an “insurer of last resort” . . . so if it isn’t able to pay out claims, then insurance companies should just be paying for the FAIR plans out of their “surplus.”
But yes, if this law suit ends up being any level of successful, CA consumers are going to be hurting real bad . . . especially when they end up having a claim that’s paid out at $0.25 per every $1 of owed indemnity.
I think that Mercedes should sell me a brand new 3 row SUV for the same price as a Honda Civic.
Is that likely? Is that reasonable? What if I complained more loudly?
Hey, what would happen if we just passed a nationwide law that mandated that the price of a dozen eggs was limited to $1 retail price. That would fix everything, right?
Apparently insurers are supposed to be charities that can print money at will.
Perhaps they should’ve pushed for federalization of the P&C insurance industry if they really want that to be the case.
Considering the events of the past two months, I think even the consumer advocate might think better of such an approach.
It also incentivizes people to live in naturally hazardous areas.
Unfortunately that is the perception. It’s not helped by having every second commercial on TV being for an insurance company.
Hey, geckos and emus need jobs too.
This is very much the mindset of Consumer Watchdog.
And the bigger problem, IMO, is the fact that their ability to intervene is placed in their laws. So if they file an intervener with the DOI, implementing a rate change is delayed even if the DOI has determined that things are “on the up and up”.
Not California but similar problems with insurers pulling out.
“People don’t realise, but insurers have to price to the risk, and … they’re sometimes better at risk assessment than governments are.
“People like to blame them. But why would you give away money if you’re in a business?
“I’m not an apologist for the insurance industry, but it’s just maths.”
Pretty much this.
Not only that, but they learn from their mistakes. Cuz, people investing in the company want some decent ROI.