LOS
ANGELES, Sept. 17, 2024 /PRNewswire/ -- Homeowners
who were dropped by their insurance company and confronted with
massive rate hikes spoke out at an Assembly Insurance Committee
oversight hearing of Insurance Commissioner Lara's response to the
homeowner insurance crisis.
"My homeowners association premiums went from $175,000 four years ago to $1.7 million today," said Chatsworth resident Bruce Breslau, whose
homeowners association was forced to pay a 400% increase in 2024.
"It's outrageous that insurance companies can gouge us when our
community has worked to protect ourselves from fire risks. There is
no relief in sight for our community."
"I have been forgotten and left to the expensive and low
coverage FAIR plan," said Gigi
Bannister, a 64 year old veteran and former fire fighter
from Crestline. "The plan on the
table will mean only greater rate hikes and no better coverage for
people like me. We need to be guaranteed coverage when we take
precautions to protect our homes from fires."
Consumer Watchdog condemned Insurance Commissioner Lara's
proposed regulation, the subject of a separate, simultaneous
Department of Insurance Zoom hearing for the public Tuesday, which
Lara would apparently not attend as it was at the same time as his
Assembly testimony in Los
Angeles.
The regulation will allow insurance companies to boost premiums
based on secret algorithms related to climate models, but does not
expand coverage for policyholders who have been non-renewed.
Consumer Watchdog said the Commissioner lied when he promised
insurance companies would have to cover 85% of homeowners in
wildfire areas in exchange for that right to raise rates – no such
requirement exists in the pending regulation.
"Lara promised Californians that he will require insurance
companies to cover homeowners in 85% of the wildfire areas. Lara
lied. His regulation will allow companies to increase coverage for
only 5% of people in those areas – or not at all, if an insurance
company says that it is already in compliance, or claims it is not
yet ready to comply," said Harvey
Rosenfield, author of insurance reform Prop 103 and founder
of Consumer Watchdog. "This is an outrageous bait and switch. Every
policyholder in California will be
paying hundreds and potentially thousands of dollars more for their
home insurance under his plan."
Lara said as recently as September
11th, "They're going to cover 85% of properties in the
distressed areas while also removing policies from the FAIR Plan.
Insurance companies must detail where they are writing policies in
their submitted rate filings, and my department would use its
enforcement authority to hold them accountable."
But the fine print of the regulation allows companies to choose
to cover a mere 5% more than they cover now in exchange for the
right to charge more. Companies that do not want to increase sales
even by 5% may propose an unspecified third alternative option.
(See Pg. 6 Section 2644.4.8(d). of the proposed regulation.)
Insurers would not be required to open their books to prove to the
public that they have met their commitment.
Consumer Watchdog Objects to Proposal at Separate Agency
Hearing
In addition, Consumer Watchdog presented detailed criticisms of
the Commissioner's proposal at a virtual Department of Insurance
hearing today on the model regulation, conducted at the same time
as the Assembly Committee's oversight hearing. Lara has not been
present at any of the agency hearings where the public has
commented on his regulations. The so-called "commitment" underlying
Lara's proposal was developed behind closed doors with the
insurance companies.
"Commissioner Lara's regulation won't require expanded access to
insurance for Californians, and doesn't require review or approval
of the black box catastrophe models insurance companies want to use
to raise rates. Instead, it's riddled with loopholes and
limitations that will mean massive unjustified rate hikes on
homeowners, renters and small business owners without improving
access to coverage," said Carmen
Balber, executive director of Consumer Watchdog.
Consumer Watchdog took issue with the regulation for not
requiring insurance companies to return to areas of the state they
have abandoned:
- Insurance companies won't have to expand sales to 85% of
consumers in distressed areas. They may opt instead to increase
their market share in distressed areas by just 5%, or choose a
third, undefined, "alternative commitment".
- Insurance companies won't have to sell comprehensive coverage.
They may offer a bare-bones policy equivalent to what consumers get
today on the FAIR Plan.
- Rate hikes start on Day 1, but insurers won't report progress
toward commitments for two years – until at least 2027.
- After two years, an insurer may put off meeting a commitment
indefinitely, as long as it claims to be making a "reasonable
effort."
- There are no penalties if a company fails and no timelines for
completion.
The Commissioner has also falsely claimed the regulation will
provide robust public review of the black box models he will allow
insurance companies to use to raise rates. In fact, the
regulation:
- Creates a process designed to keep models and their algorithms
private, violating Prop 103's public disclosure requirements.
- Does not require wildfire models be proven reliable,
predictable and unbiased
- Contains no guidelines for minimum information to be made
public; required disclosures will be different for every model.
- Actively discourages public participation and expert review of
models.
- Makes the whole process voluntary, and any model currently in
use is exempted from a PRID entirely for up to four years.
The group called for the creation of a public wildfire model in
California that would be
transparent and accessible to the public so consumers can
understand their own climate risk and can be confident their rates
are fair.
Read Consumer Watchdog's testimony detailing the regulation's
pitfalls here.
Read the stories of LA homeowners who face unconscionable
treatment by the insurance industry:
Bruce Breslau Chatsworth
https://consumerwatchdog.org/profile/homeowners-insurance/bruce-breslau/
Gigi Bannister Crestline
https://consumerwatchdog.org/profile/gigi-bannister/
Jennifer DeNicola Calabasas
https://consumerwatchdog.org/profile/jennifer-denicola/
Evan Cervantes Sunland
https://consumerwatchdog.org/profile/evan-cervantes/
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SOURCE Consumer Watchdog