Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Supervisor Ray Mueller
Subject: Resolution requesting State action to stabilize California's property insurance marketplace
RECOMMENDATION:
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Adopt a resolution requesting that:
A) The Governor declare a state of emergency relating to the property insurance market; and
B) The Governor, Insurance Commissioner, and the California State Legislature take immediate action to strengthen and stabilize California's residential and commercial property insurance market; and
C) The President of the Board of Supervisors be authorized and directed to transmit a letter to appropriate State officials requesting that steps be taken to stabilize the property insurance market.
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BACKGROUND:
In 1988, California voters enacted Proposition 103, which established consumer protections to keep insurance rates fair and affordable and to ensure a competitive marketplace. However, unlike public utilities, which are required to cover all consumers, insurance companies are not required to write insurance policies, especially in high-risk areas, unless they are able to ensure they have the capital and reserves to fully meet all insurance claims submitted by consumers, cover their expenses, and earn a fair return.
The California Fair Access to Insurance Requirements, or FAIR Plan, was established specifically to provide insurance coverage to homeowners in high-risk areas, including, for example, homes in fire zones or along earthquake fault lines. The FAIR Plan is offered through a shared market where licensed insurance companies agree to share the risk of California homeowners who insurers decline to cover outside of the FAIR Plan.
In 2023, two of the State's largest insurance carriers announced they would stop issuing new homeowners and commercial property insurance policies in California. These carriers represented over 27 percent of the insurance marke...
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