PD Editorial: Insurance commissioner race must focus on homeowners crisis
The 2022 election is getting off to an early start in California.
On Monday, North Bay Assemblyman Marc Levine announced his candidacy for state insurance commissioner.
No doubt, the prospect of another campaign so soon after an expensive — and unwarranted — recall will give some voters heartburn. But shining a spotlight on the insurance commissioner could pay off, especially in areas at risk from wildfires.
That, unfortunately, is pretty much every square mile of the Golden State.
An elected insurance commissioner is the most recent addition to California’s roster of constitutional officers, added by voters in 1988, and it may be the most obscure.
But there’s nothing mysterious about the growing crisis in California’s homeowners insurance market.
Hundreds of thousands of property owners have been hit with enormous premium increases or lost their coverage altogether as insurers abandoned high-risk fire areas. Paradoxically, even more retained theirs because of actual fires.
Unfortunately, those reprieves last just one year — unless another fire triggers an extension.
There’s too much at risk for California to keep relying on stopgap measures.
Most homeowners must carry insurance as a condition of their mortgage, and it would be risky to go without coverage even if it weren’t required. Those who can’t get a policy are routed into a high-cost, last-resort plan called FAIR.
Insurers, meanwhile, are struggling after multiple years of losses attributable to wildfires and, according to industry insiders, finding it increasingly difficult to limit their exposure through worldwide reinsurance pools.
A comprehensive fix is long overdue.
Any overhaul will require approval by lawmakers, and possibly by voters, and the state’s elected insurance commissioner needs to lead the way.
Ricardo Lara, a Democrat from Southern California, has been insurance commissioner since 2019. Before that, as chairman of the state Senate’s insurance committee, he authored a law that authorizes the one-year moratoriums on policy cancellations in areas scorched by wildfires.
Lara used the law for the first time in 2019 to shield almost a million policyholders statewide, including 140,000 in Sonoma County. In 2020, he issued moratoriums covering 2 million policyholders. And, on Monday, he extended protection to 325,000 policyholders affected by the Dixie and Caldor fires, which are still burning in the Sierra.
Each of these moratoriums is a brief window to bring the homeowners insurance market back into equilibrium. But there has been little, if any, progress.
Proposals range from barring nonrenewal for policyholders who harden their homes against fire to creation of a statewide risk pool, similar to the National Flood Insurance Program or the California Earthquake Authority.
Levine, D-San Rafael, recently unveiled his plan, which would establish a state authority to sell catastrophic wildfire insurance policies and a state reinsurance fund, and require insurers to provide premium discounts for owners who harden their properties. But the Legislature already adjourned for the year, so Levine’s bill won’t even get a hearing before January.
Levine opened his campaign for commissioner with an attack on Lara for breaking a pledge to refuse campaign contributions from people with ties to the insurance industry. Lara, like other politicians, needs to be accountable for his promises. But voters will be better served if these candidates, and any others who enter the race, keep a laser focus on finding ways to make sure homeowners insurance remains available and affordable throughout California.
You can send letters to the editor to email@example.com.