SACRAMENTO, Calif., June 26,
2024 /PRNewswire/ -- Loopholes in the latest
regulation proposed by Insurance Commissioner Ricardo Lara will enable continued insurance
redlining and non-renewals in fire zones, not spur the coverage
expansion Lara promises, Consumer Watchdog will testify this
afternoon at a Department of Insurance workshop.
The regulation is supposed to link new coverage in fire areas to
allowing insurers' use of catastrophe models' secret algorithms to
increase rates. But the rule's lack of teeth will leave consumers
paying huge rate hikes and get nothing in return, the group will
testify. Prices will go up for every Californian, not just those in
fire areas.
Sign up to watch the 2:30 PM
workshop online here.
Consumer Watchdog's testimony for today's workshop will be
available here on Thursday.
"The massive loopholes in the text of the Commissioner's
regulation won't get insurance companies selling again in the
hardest-hit areas of California,"
said Carmen Balber, executive
director of Consumer Watchdog.
Consumer Watchdog's testimony identifies the top five loopholes
in the regulation, most of which contradict how it has been
presented to the public by the insurance commissioner.
The proposal:
- Imposes price hikes from unverifiable catastrophe models on Day
1, but insurance companies' supposed commitment to sell in fire
areas again won't start for two years.
- Insurance companies will not have to offer comprehensive
coverage. They may meet commitments with a bare-bones policy
equivalent to what is offered today by the FAIR Plan.
- Does not require insurance companies to expand sales in fire
areas to 85% of what they sell elsewhere. All companies, not just
small companies as the commissioner previously said, could opt
instead to only increase their market share in high fire zones by
5%. Insurers could also make up any other "alternative commitment"
they choose.
- Contains no hard deadline for implementation. As long as an
insurer says it is making a "reasonable effort" toward meeting a
goal, they may defer actually meeting it indefinitely.
- There are no penalties if a company fails.
"This rule has no 85% commitment, no timelines, no penalties,
and no guarantee a single homeowner who has been abandoned by the
insurance industry will be covered again. In two years when
insurance companies come back to the Department and say we didn't
make it, but we promise we're trying, where will that leave
homeowners? Uninsured and wishing the commissioner had written a
regulation with teeth," said Balber.
In prior testimony Consumer Watchdog has urged the insurance
commissioner to push forward the creation of a transparent public
wildfire model to enable regulators and the public to confirm
models' impact on homeowners' insurance rates is fair. The easiest
way to guarantee homeowners access to coverage is legislation
mandating that home insurers cover Californians if they meet state
guidelines for protecting their homes from wildfire, said the
group.
Read Consumer Watchdog's Testimony on the Commissioner's
regulation proposing to continue the secrecy of black box models
here.
Read Consumer Watchdog's testimony on the bias and inaccuracy of
black box catastrophe models here.
And here.
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SOURCE Consumer Watchdog