California considers new rules for property insurance pricing

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California is considering new rules for property insurance pricing. The state's insurance commissioner, Ricardo Lara, has proposed several reforms, including:

Requiring insurance companies to write more policies in high-risk areas. Currently, insurance companies are allowed to redline certain areas, meaning they can refuse to write policies there. Lara's proposal would require companies to write a certain percentage of their policies in high-risk areas, such as those prone to wildfires.

Creating a statewide insurance pool. This pool would be made up of all insurance companies operating in California. It would be responsible for covering losses in high-risk areas where companies are unwilling to write policies.

Limiting the amount that insurance companies can raise rates. Currently, insurance companies can raise rates by up to 10% per year without approval from the state. Lara's proposal would limit rate increases to 5% per year.

These reforms are aimed at making property insurance more affordable and accessible for Californians. The state has experienced a number of major wildfires in recent years, which have led to billions of dollars in losses. As a result, many insurance companies have been raising rates or refusing to write policies in certain areas.

Lara's proposal has been met with mixed reactions. Insurance companies argue that the reforms will make it more difficult and expensive for them to operate in California. Consumer advocates argue that the reforms are necessary to protect homeowners from rising rates and limited coverage options.

The California legislature is expected to consider Lara's proposal in 2024.

In addition to the reforms proposed by Lara, there are a few other things that can be done to make property insurance more affordable and accessible in California. These include:

Mitigating wildfire risk. This includes things like clearing brush and debris from around homes, creating defensible spaces, and hardening homes against wildfires.

Creating a state-run insurance company. This could provide an alternative to private insurance companies for homeowners in high-risk areas.

Subsidizing insurance costs for low-income homeowners. This would help to make insurance more affordable for those who need it most.





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