According To New Statistics, Insurance Firms Will Renew Fewer Homeowners’ Policies in 2020, But FAIR Plan’ Insurer Of Last Resort’ Coverage Will Grow.
New data provided by the California Department of Insurance, the number of homeowners whose insurance policies were not renewed by their insurers decreased by 10% statewide in 2020 compared to the previous year.
More than 80% of the statewide drop in non-renewals was due to Insurance Commissioner Ricardo Lara’s mandatory moratoriums. In addition, the number of policies written by the FAIR Plan climbed for the second year in a row to a new high, highlighting the importance of Lara’s continuous efforts to improve consumer coverage. The data covered approximately 98.8% of the state’s homeowners’ insurance market.
“More people are putting their hands up to safeguard their houses from wildfires. “And more insurance companies are responding to my demand for home security incentives,” Lara stated. ” We have a market for insurance that benefits all California residents, I’m committed to enhancing home safety actions to safeguard homes and promote market competition, as well as strengthening the FAIR Plan, the state’s insurance safety net, to better meet consumers’ and businesses’ coverage needs.”
Insurance company non-renewals declined from 235,597 in 2019 to 212,727 in 2020, a loss of 22,870 policies. The number of new and maintained residents’ policies issued by the voluntary market climbed from 8.62 million to 8.7 million, a gain of 82,635 policies. Although data suggests that locations with the greatest danger of wildfires had higher rates of non-renewals, California is the nation’s largest insurance market, and non-renewals by insurance companies affect fewer than 3% of California customers.
The FAIR Plan, an organization made up of insurance firms that operate as California’s “insurer of last resort,” provides insurance coverage to fewer than 3 percent of the state’s homes. However, the number of consumers obliged to purchase a policy from the FAIR Plan, since they could not find an insurance provider prepared to offer them coverage climbed by 49,049 procedures. In October, the Sacramento Bee reported that the FAIR Plan forecasts continuous expansion of guidelines in 2021, although the Department of Insurance data only covers 2020.
The statistics also revealed that Lara’s initiatives positively impacted non-renewals, particularly in high-risk locations. For example, Lara used a state law he wrote when he was a member of the California State Senate to enact a series of temporary one-year moratoriums on non-renewals, protecting more than 1 million policyholders in 2019 and 2.4 million in 2020 who lived in the perimeter or adjacent to a governor-declared wildfire disaster. As a result, non-renewals fell by approximately 20% in places where moratoriums were in place, compared to less than 3% in areas where suspensions were not in place.
“As stakeholders strive to decrease wildfire risk and restore accessible and reasonable insurance alternatives, temporary non-renewal moratoriums are critical to California property owners and communities,” Amy Bach, executive director of United Policyholders, stated. “The evidence behind encouraging home safety is undeniable, and consumer organizations and first responders have backed it up.” In addition, Commissioner Lara has implemented long-overdue FAIR Plan modifications that will benefit homeowners even after we resolve the non-renewal issue.”
Lara has sponsored in-person and virtual talks on wildfire concerns in 36 counties, attended by over 10,000 local citizens, since entering office in 2019, following the state’s worst fires in its history. He’s developed a thorough approach to foster a competitive insurance market for all areas while also increasing consumer safeguards due to these conversations.
Several major insurance firms, including Allstate, CSAA, and Farmers, have informed the Department of Insurance that they will boost the number of new homes policies sold in the state while reducing or eliminating non-renewals,among the consumer rights measures undertaken by Lara since taking office in 2019.
Recent Department of Health coverage insurance company rate filings has significantly expanded insurer-recognized consumer mitigation efforts and grown premium discount offerings, up to 20% for wildfire-hardened homes, to include 2 in 5 consumers – with five different companies offering incentives since 2019. The Department of Insurance’s website has a comprehensive list of firms that would provide premium savings.
He directed the FAIR Plan to increase homeowners coverage limits to keep up with rising property prices in California and offer a complete homeowners’ insurance coverage option in addition to the present restricted coverage. While the FAIR Plan has fought the commissioner’s order, a court determined in July that the commissioner has the jurisdiction to require the FAIR Plan to give these consumer-friendly improved coverage alternatives.
It has established a cooperation with Gov. Gavin Newsom’s administration to bring together the state’s primary disaster response and preparedness organizations to develop resilient wildfire protection measures for homes and communities. But, unfortunately, that group is nearing the end of its job.
They have introduced new laws to encourage safety mitigation measures and give customers more information about their wildfire risk scores. When fully implemented, these laws would force insurance firms to include homeowners’ safety measures when assessing wildfire risk to homes and communities and provide customers with access to their risk assessments and the ability to challenge them.
Sponsored legislation that raises wildfire survivors’ payments and evacuation assistance. Despite criticism from the insurance business, Senator Bill Dodd of Napa wrote Senate Bill 872, introducing additional safeguards.