Insurance group requires reform of California’s regulatory framework

The American Property Casualty Insurance Association (APCIA) has expressed considerations over the precarious state of the insurance coverage market in California, calling for the reform of the state’s regulatory framework.

APCIA president and CEO David A. Sampson issued a press release highlighting the significance of regulatory reforms after Farmers Insurance joined different main carriers in limiting new home-owner insurance policies in California.

“Insurers do not want to retrench from one of the nation’s most important markets but cannot continue to operate and protect policyholders when insurers are struggling to secure an adequate rate and manage their risk exposure,” mentioned Sampson.

Central to the group’s argument is the “outdated” nature of Proposition 103, which requires insurers to acquire prior approval from the California Department of Insurance (CDI) earlier than implementing charge modifications.

“California’s regulatory framework is 35 years old and is ill-equipped to handle the increasing challenges wrought by climate change and is resulting in the insurance market upheaval California faces today,” he mentioned. “It is time to modernize Proposition 103.”

While the CDI has acknowledged the need for charges to replicate precise and future threat, Sampson mentioned the present regulatory scheme has made it tough for insurers to place this concept into follow.

“Insurers must have the financial strength to deliver on our promises to customers when disaster strikes,” he mentioned.

• Allowing the usage of forward-looking disaster modeling in charge filings
• Allowing the usage of reinsurance in ratemaking
• Streamlining the speed submitting course of to fulfill statutory timeframes
• Reforming the California FAIR Plan evaluation course of to cut back publicity for remaining non-public insurers
• Advocating for expanded wildfire mitigation efforts to cut back threat and enhance protection in high-risk areas

“Insurers understand that homeowners are struggling right now,” mentioned Sampson. “Insurance affordability and availability have a very real impact on families, individuals, business owners, and communities. That’s why we are advocating for solutions.”

An organization spokesperson mentioned the choice has to do with “record-breaking inflation, severe weather events, and reconstruction costs continuing to climb.”  

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