It would be wrong to assume that California regulators and lawmakers are only now starting to ponder what to do about a potential insurance crisis in the wildfire-prone state.
Executive SummaryDoes Proposition 103 need an overhaul? That's a key question lawmakers have started asking as they examine the contributors to a growing insurance crisis in the California property market, eyeing factors beyond the increased frequency and severity of wildfires in the state.
Here, Wells Media West Coast Editor Don Jergler reviews how we got to this point. After a little bit of history and a review of recent activities of carriers, regulators, agents and lawmakers, Jergler reveals that legislators, who have been listening to all sides of the crisis, may be the next to act with a Prop 103 fix.
This article is the cover story of Carrier Management's third-quarter print magazine, publishing in late August. Consider becoming a Carrier Management member for regular magazine deliveries and access to exclusive content.
A state of urgency has been brewing for a few years—long before a string of large carriers said they are less interested in writing California property business. With it becoming increasingly evident that there would be a likely impact on more and more of the state’s insurance buying public, attention has turned to a possible change in the state’s guiding insurance laws, or at least how they are enforced.
State Farm General Insurance Co. announced at the end of May that it stopped accepting new policy applications for property/casualty insurance in California for reasons including increased risks from wildfires and inflation. The decision followed a similar move by Allstate Corp. last year. Farmers in early July announced it will limit new homeowners insurance policies in California.
Other large carriers that have reduced their appetite for writing California homeowners insurance include American International Group (AIG) and Chubb. Agents are reporting that businesses in higher-risk areas are paying increasing more for property insurance, which is becoming harder to obtain. Liberty Mutual said in late July it will stop offering its businessowners policy on Oct. 1.