They also complain that they are having to pay more for reinsurance, which they cannot recoup from ratepayers. Insurance companies say that because they can’t consider climate change in their rates, it makes it difficult to truly price the risk for properties. Of the 20 most destructive fires in state history, 14 have occurred since 2015, according to the California Department of Forestry and Fire Protection. What is the problem?Ĭlimate change has intensified wildfires in California. Companies are not allowed to consider their reinsurance costs when setting rates for California homeowners. Insurance companies also buy insurance themselves, a process known as reinsurance. When setting their rates, insurance companies cannot consider current or future risks to a property. It said insurance companies had to get permission from the state Department of Insurance before they could raise their rates. In 1988, California voters approved Proposition 103. Unlike most states, California heavily regulates its property insurance market. Here’s a look at what California Insurance Commissioner Ricardo Lara proposed and how it would affect the state’s insurance market: What are the rules for insurance companies? But they failed to reach an agreement before the Legislature adjourned for the year last week. Some state lawmakers tried to come up with a bill that would address the issue. WATCH: How climate change is making fall foliage less colorful Seven of the 12 largest insurance companies by market share in California have either paused or restricted new policies in the state since last year. (AP) - Months after California’s home insurance market was rattled by major companies pausing or restricting their coverage, the state’s top regulator said Thursday that he would write new rules aimed at persuading insurers to continue doing business in the nation’s most populous state.
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