PLACER COUNTY, Calif. — Placer County supervisors are calling on Governor Gavin Newsom to declare a state of emergency for homeowners and commercial property insurance.
“It’s truly a crisis. Placer County, we believe, is the top county in the state for non-renewals. I know that our county and our residents are doing everything they can and they want to do more. But they need to have that recognized. If they’re going to harden their homes and do their defensible space, they need insurance breaks,” said District 5 Supervisor Cindy Gustafson.
The board sent a letter to the governor and Insurance Commissioner Ricardo Lara, calling for immediate emergency regulatory and legislative action from the state to stabilize the insurance marketplace.
A July survey showed more than half of respondents didn't have their insurance policies renewed or were facing much higher premiums. Officials also raised concerns about the future solvency of the California FAIR plan, the "insurer or last resort."
Placer County officials hope the emergency regulations can help expand coverage options and improve the Department of Insurance's rate approval process.
Supervisors in Shasta and San Bernardino counties also passed similar resolutions calling for more state help with the insurance crisis, according to a Placer County news release.
“We're hoping to elevate this and give the governor and the insurance commissioner more tools and more support for the efforts they're making with the rest of our legislature," Gustafson said.
Commissioner Lara and his Department of Insurance are in the process of taking action, at the direction and with the support of Governor Newsom. A year ago, Lara announced his Sustainable Insurance Strategy, with a promise to have it implemented by the end of 2024.
It includes expediting the rate approval process for insurance companies; allowing insurers to use forward-looking, so-called ‘catastrophe modeling’ when pricing their products — but only if they agree to write more policies in wildfire-prone areas; and shoring up solvency protections for the California FAIR Plan. The FAIR Plan has ballooned in recent years as other carriers have pulled out of the market.
Insurance experts like Karl Susman, Susman Insurance Agency, are hopeful these measures will help stabilize the market starting next year.
"I think, realistically, we should expect to see companies begin to re-enter the market, getting their toes a little bit wet, maybe in the first quarter," Susman said.
But Placer County Supervisors say that’s not soon enough, and they worry market stabilization under the commissioner’s current plan could take even longer.
“We just felt it was time to make a strong statement that waiting for a year or two for more admitted carriers to come in is too long for some people," Gustafson said. "In the meantime, if they become homeless because we've driven them out of their homes because of these rates, that's not what we want to see. So we need a backstop.”
She said Placer County learned it has more Firewise Communities than any county in the nation. Those are neighborhoods that have implemented wildfire-resistant home-hardening practices and have been certified by the National Fire Protection Association.
But as one survey respondent put it, “Doing the defensible space work makes you feel better, but doesn't result in any savings or protection from cancellation. That should change.”
“Those sorts of investments need to be recognized by the insurers," Gustafson added.
In response to the Board of Supervisors, a California Department of Insurance spokesperson provided the following statement to ABC10:
"Commissioner Lara and the Department of Insurance is taking decisive action with urgency while ensuring transparency, as we move forward with the most significant insurance reforms in over 30 years since Proposition 103 was enacted in 1988. We appreciate Placer County’s support for our ongoing regulatory efforts to address this insurance crisis. We are working tirelessly to stabilize California’s insurance market to protect consumers and enhance the availability of coverage.
"We are focused on establishing fair, modern regulations that encourage competition and avoid overregulation, which could ultimately harm consumers. By the end of this year, the Department will have enacted multiple regulations, administrative actions, and held public meetings to transform the insurance landscape — leading to more companies writing policies across all areas of our state.
"We will continue to support Placer County and all California counties as we address this unprecedented insurance crisis together."
ABC10 also reached out to Gov. Newsom's office. Spokesperson Alex Stack told ABC10:
"Our Administration, in partnership with the Insurance Commissioner's office, is actively overhauling the insurance system — having rolled out measures to help address this crisis and continuing to work on initiatives to will protect homeowners. And we’re doing this on an accelerated timeline, with the Governor calling 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."
He directed ABC10 to this news release about what has been done so far.
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