Consumer advocate voices opposition to wildfire insurance rate reform plan at California Assembly hearing

The California Department of Insurance (CDI) and its commissioner Ricardo Lara presented its Sustainable Insurance Strategy rate reform proposal to the California Assembly Insurance Committee at its oversight hearing on September 17.

Consumer Watchdog, the consumer advocacy non-profit with intervenor status in the proceedings, has criticized the proposal and did so again at the hearing. Representatives of the group presented a press conference before the hearing outside the venue, Los Angeles City Hall.

As previously reported when CDI issued the strategy on June 12, insurers will be allowed to increase rates and use proprietary algorithms to determine rates and coverage – if they provide coverage in 85% of wildfire prone areas. However, the strategy gives insurers leeway to just increase sales in distressed areas by 5% or show a good faith effort to provide coverage in the next two years. 

Jamie Court, president and chairman of Consumer Watchdog, addressed the Assembly committee in the hearing, stating that CDI's strategy proposal allows insurers to evade their commitment to provide coverage, so homeowners in affected areas will end up without coverage, or insufficient FAIR plan coverage. 

"Consider the one reform that will work," Court said. "Requiring a real homeowners insurance policy for people who fireproof their homes." He added that a bill requiring this has been proposed to the Assembly committee twice before and has not had a hearing.

The office of Lisa Calderon, chair of the committee and assembly member representing the 56th district covering South El Monte, 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 September 17 hearing.

Lara said in the hearing that CDI is planning to put its proposal in effect at the start of 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 "gearing up to file" under the proposal in 2025, and that Allstate representatives said at a CDI workshop they would begin new coverage throughout California once the proposal is in effect.

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

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