Board Chairman works with state to address insurance crisis

Motorists crowd roads as the Line Fire approaches.

The Bridge and Line Fires reminded San Bernardino County residents about how the California homeowners insurance crisis leaves them and their property vulnerable to uncovered damages.

The day before the Bridge Fire broke out on Sept. 8, Board of Supervisors Chairman and Third District Supervisor Dawn Rowe, hosted a virtual insurance town hall with California State Insurance Commissioner Ricardo Lara to discuss steps the state is taking to stabilize and strengthen the insurance marketplace for homeowners and commercial properties.

“Our communities are facing unprecedented challenges due to rising insurance costs and coverage cancellations, particularly in wildfire-prone areas,” Rowe said. “Our town hall provided an important opportunity to connect residents with state, nonprofit and county experts, offering resources to help navigate the insurance crisis. We are committed to working to ensure residents and businesses have access to affordable, reliable coverage.”

The town hall was spurred by a June 25, 2024, Board of Supervisors resolution urging state action in response to the growing insurance crisis, particularly for those in wildfire-prone areas.

Lara acknowledged the crisis, stating that climate change has strained insurance markets across the U.S. and worldwide. To address the crisis, the California Department of Insurance is modernizing the state’s outdated insurance system, Lara said.

At the core of the problem is Proposition 103, a measure passed over 30 years ago to govern insurance rates. Proposition 103 fails to regulate the insurance market under modern climate challenges. Currently, insurers are not required to cover all properties, especially in high-risk areas, leaving many homeowners without options. Lara said his sustainable insurance strategy aims to fix this by expanding coverage and encouraging competition in these distressed areas.

A key part of Lara’s plan is the introduction of new catastrophe modeling technology by December 2024. This technology will allow insurers to assess wildfire risks more accurately and price policies accordingly, reflecting homeowners’ mitigation efforts. Insurers must cover 85% of properties in wildfire-prone areas to use the technology and begin removing policies from the FAIR Plan, California’s insurer of last resort. Properties with wildfire risk mitigation will be prioritized for standard coverage, encouraging homeowners to harden their properties.

Lara said his reforms aim to increase competition, reducing costs for consumers. Allstate and Farmers Insurance have already signaled their return to the California market, which is a positive sign for homeowners seeking affordable insurance. These changes are expected to stabilize the insurance market long-term, making coverage more accessible and fairly priced.

“We need to make our market competitive again so that insurance companies are fighting for your business,” Lara said, emphasizing the importance of competition to drive down costs.

In an effort to encourage residents to mitigate wildfire risks, Lara announced the “Safer from Wildfires” program. This initiative allows homeowners to qualify for insurance discounts if they take steps to harden their homes against fire damage. Lara urged residents to take advantage of state and county programs designed to help fortify their properties, emphasizing that reducing wildfire risk is critical for long-term affordability and availability of insurance.

Amy Bach, executive director of United Policyholders, a nonprofit focused on educating and advocating for insurance consumers across the U.S., also spoke during the town hall. She offered practical advice for homeowners struggling to find affordable insurance. Bach emphasized shopping around for coverage, noting that each agent or broker may have access to different insurers. She also encouraged pairing a California FAIR Plan policy with a Difference in Conditions (DIC) policy for more comprehensive coverage.

Bach highlighted that insurers use risk scores, similar to credit scores, to determine coverage eligibility and pricing. Homeowners should ensure that mitigation efforts, such as home hardening or participation in Firewise programs, are reflected in their risk scores to potentially lower premiums.

San Bernardino County Fire Protection District Chief Dan Munsey stressed the role of fire prevention in maintaining and improving insurance availability. He introduced the county’s “Residential Assessment Program,” which offers free fire safety inspections to help homeowners protect their properties against wildfire risks. Munsey echoed the importance of collective action, saying, “The only way we maintain affordable insurance is by reducing our fire danger. Neighbor helping neighbor and strict adherence to abatement regulations is the key to preventing large fires and protecting our homes.”

Despite these efforts, many Californians, particularly in San Bernardino County’s mountain communities, continue to face challenges in securing affordable insurance. During the town hall’s Q&A session, residents expressed concerns over sudden coverage cancellations and rising premiums. Lara reassured attendees that his department is working to address these issues and encouraged residents to reach out to the California Department of Insurance for assistance.

To learn more, visit www.insurance.ca.gov. A link to the virtual town hall recording can be found here.

Bridge Fire started on 9/8. Line Fire started on 9/5. [JA1]

Do we want to include the full name: Farmers Insurance [JA2]

Additional County Update News – September 19, 2024