CALIFORNIA, USA — Foster family agencies say one of their major insurance carriers is no longer renewing policies in the state as California's insurance crisis continues.
"We really have to have that insurance to be able to operate, especially our foster family agency," said Tony Yadon, the CEO of Parents by Choice.
Parents by Choice is a Stockton-based nonprofit, aimed at helping foster youth in the welfare system, insurance is required, as it protects the agency from various claims, including sexual misconduct insurance. The Nonprofits Insurance Alliance of California (NIAC) has been its provider.
"It's a very costly piece of our operation and we have to make sure that we're not only getting the best insurance, but we're getting the best price," said Yadon.
In September, NIAC announced it would not renew policies for all California-based agencies, blaming AB 2496. The governor recently signed that bill into law. The bill, authored by Assemblymember Gail Pellerin (D-Santa Cruz), is meant to protect children from any misconduct within the foster care system by holding agencies liable. Because of that, NIAC believed this would increase risks for the agencies.
"I was very concerned. NIAC has apparently become one of the only insurance providers left in California," said Yadon.
Parents by Choice now has four months until its policy expires.
"We either have to close our foster care program and not serve these youth any longer, or we have to find an insurance provider," said Yadon.
California Alliance is an organization that provides policy and advocacy support for agencies and says if foster agencies are able to find another insurer, it would be at a much higher cost.
"Easily for most providers, probably quadrupling their premiums," said Christine Stoner-Mertz.
The CEO of NIAC provided ABC10 with the following statement:
"If the legislature passes the original provisions of AB 2496 that made some modest changes to apply the law fairly to Foster Family Agencies so that they are not held accountable either for the wrongful or negligent acts of counties nor the unforeseeable random criminal acts of third parties over which they have no control, NIAC will resume providing these important coverages for Foster Family Agencies in California.
We put in a tremendous amount of time and effort to be able to continue to insure FFAs without pause, but plaintiff attorneys wrongfully claimed that the provisions of AB 2496 would limit the ability of foster children to recover damages from FFAs own negligence or wrongful acts. That was never the case with AB 2496.
We challenged the plaintiff attorneys to show us any provisions of AB 2496 that would restrict the ability of foster children to recover from an FFA for their own errors and they were unable to point out anything that would have that effect. When AB 2496 passed without the required provisions, NIAC determined that it was no longer able to use the justice system to protect FFAs that had done nothing wrong. FFAs have become uninsurable because the judicial system has become more like a lottery system to award jackpots to a few (without regard to who was at fault) rather than any semblance of a system for getting justice."
Asm. Pellerin provided ABC10 with the following comment:
"AB 2496 was introduced in June in response to an urgent and dire situation impacting 9,700 of our most vulnerable children in foster care.
The bill was heard in four committees, passed by both houses and amended to reflect feedback as the bill moved through the legislative process. My office and I have conducted a thorough and collaborative stakeholder engagement which is evident in the final version of AB 2496 having no opposition.
Foster Family Agencies play a critical role in the care of some of California’s most vulnerable children. I introduced AB 2496 to ensure Foster Family Agencies (FFA) would not lose their liability insurance this year leading to displacement of the 9,700 children in their care. Unfortunately, Nonprofits Insurance Alliance of California (NIAC) which insures 90% of FFA’s, announced in late August it will not renew insurance coverage for all FFAs in the State. NIAC’s reinsurer said it could no longer reinsure NIAC if it continued to insure FFAs due to increased liability. The result of the nonrenewal would mean that 9,700 foster children would be removed from their foster homes and revert to the custody and care of the County. Unfortunately, counties are not set up to adequately and appropriately care for these children.
I would also like to stress that AB 2496 is a temporary solution to keep our most vulnerable foster kids in their current homes, and I am thankful that Governor Gavin Newsom to signed AB 2496 into law. I hope that all stakeholders can work together between now and January 2025 and come back with an urgency bill to ensure the continued operation of FFA’s in California. I also join Insurance Commissioner Ricardo Lara in his call to action to urge all property and casualty insurance companies operating in California to find a way to offer coverage to FFAs and help stabilize the state’s foster system."
The California Department of Social Services provided ABC10 with the following statement:
"AB 2496 was recently signed into law and the Department is in the process of implementing this legislation. Family Foster Agencies are an integral part of California’s continuum of care serving foster youth. The Department continues to work closely with counties, providers, and other stakeholders to support the provision of appropriate placement options and critical services."
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