California has some of the strictest insurance regulations in the country. Zimmerman and the Department of Insurance said the state is the only state that does not allow insurance companies to raise rates based on catastrophe models or increases in reinsurance premiums.
Current regulations only allow insurers to use catastrophe models to calculate earthquake insurance premiums. One of the proposed changes under the Sustainable Insurance Strategy would extend that risk beyond just wildfire risk to include post-earthquake fire and terrorism risks. Another proposed regulation, which has not yet been announced, would also allow insurers to incorporate reinsurance costs into rate hikes, the ministry previously announced.
The quote above is from Megan van Mans.California's major home insurance companies may resume writing new policies.Here's what you need,” san francisco chronicleApril 24, 2024.
If you haven't heard yet, Home insurance price regulation This effect has led many insurance companies to no longer write new homeowners insurance policies and, in some cases, to exit California operations. The above two paragraphs describe one important way to control prices. Insurance companies cannot determine premiums based on expected risk.
My wife and I are lucky because State Farm announced they are updating their policy, but we are not so lucky in other roles. I am a limited partner that owns approximately 1% of a large multifamily property in Bakersfield. Our insurance company told our general partner that they would not renew our insurance, but we were unable to find an insurance company that would renew our policy.
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