California Assembly Committee Hears Opposition to Rate Settlement Agreement

The California Department of Insurance (CDI) and its Commissioner Ricardo Lara unveiled their sustainable insurance strategy rate reform proposal to the California Assembly Insurance Committee at its oversight hearing on September 17.

Consumer Watchdog, the non-profit consumer advocacy organization with the status of intervener in the proceedings, he criticized the proposal and did so again in the hearing. Representatives of the group presented a press conference before the hearing in front of the Los Angeles City Hall.

That previously reported when CDI issued the strategy on June 12, insurers will be allowed to raise rates and use proprietary algorithms to determine rates and coverage — if they provide coverage in 85 percent of fire-prone areas. However, the strategy gives insurers the freedom to increase sales in distressed areas by 5% or demonstrate a good faith effort to provide coverage over the next two years.

Jamie Court, president and CEO of Consumer Watchdog, addressed the Assembly committee at the hearing, saying CDI’s proposed strategy allows insurers to shirk their commitment to provide coverage, so homeowners in affected areas will end up with no or insufficient coverage . CORRECT plan covering.

“Consider the only reform that will work,” the Court said. “Require a true homeowners insurance policy for people who fireproof their homes.” He added that a bill requiring this had been brought to the Assembly committee twice before and had not had a hearing.

The office of Lisa Calderon, the committee chairwoman and assembly member who represents the 56th district that covers South El Monte, the City of Industry, Whittier and nearby parts of Los Angeles, did not respond to a request for comment on the CDI proposal and citizen comments during the hearing on September 17.

Lara said in the hearing that the CDI plans to implement its proposal in early 2025 and emphasized several times in the hearing that the new procedures in the proposal are being developed and implemented “in record time.” He also said that insurers are “preparing to file” the proposal in 2025 and that Allstate representatives said at a CDI workshop that they would begin new coverage throughout California once the proposal goes into effect.

On the same day as the hearing, Lara announced a joint effort with Cal Poly Humboldt to create a public fire catastrophe model. In March, CDI proposed allowing insurers to use catastrophe modeling to determine rates. Most US states, other than Florida, already do this.

Two days later, on September 19, Lara ordered a one year moratorium regarding cancellations and non-renewals of coverage for approximately 750,000 policyholders affected by the airport, bridge and line fires in Orange, Riverside, Los Angeles and San Bernardino counties.