California lawmakers’ attempt to pass a last-minute bill to address the state’s home insurance crisis failed to come to fruition, having been unable to submit the proposal before the current legislative session ends this week.
The bill’s failure to pass has been celebrated by advocacy groups who argued that it would have led to steep premium hikes. They’ve said that the move amounts to a bailout for the insurance industry.
But it has also highlighted growing concerns over the stability of California’s insurance market, with many worried that it may trigger more insurer exits in the future.
Industry experts also pointed to the state’s current regulatory environment and the difficulties for insurers to secure rate increases.
“California’s decades-old regulatory system is outdated and in need of modernization to handle the increasing catastrophic losses resulting from inflation, climate change, and extreme weather,” said Denni Ritter of the American Property Casualty Insurance Association (APCIA).
According to Ritter, APCIA’s department vice president for state government relations, California needs to overhaul its current framework to create a “more efficient regulatory approval process to ensure there are enough resources in the system to cover consumer claims.”
A statement from insurance commissioner Ricardo Lara said California, like the rest of the nation and the world, is at an “insurance crossroads.”
“Legislation is one of many options that we have been pursuing,” said Lara, as cited by the San Francisco Standard. “We also are moving forward with a package of regulatory solutions that will streamline the rate review process, opening it equitably to public input—not just the entrenched interests that have benefited materially from the status quo.”
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