Get email updates:

Interested Parties Memo: Backgrounder on the difference between the candidates on the wildfire insurance crisis

To: Interested Parties

From: Marc Levine for Insurance Commissioner 2022

Re: Backgrounder on the difference between the candidates on the wildfire insurance crisis 

Date: January 12, 2022

The wildfire insurance crisis has become a critical public policy matter in California, with an ongoing wave of insurance policy cancellations and rate hikes impacting consumers and businesses across the state. 

Now, the insurance industry is attempting to use the climate crisis as an excuse to raise homeowner insurance rates even further and reduce transparency and oversight of their industry. Their actions raise fundamental questions about how California can protect homeowners, renters, and businesses in 2022 and beyond.  

The current insurance commissioner, Ricardo Lara has been plagued by scandals that have already been well documented. But he’s also making matters worse when it comes to the wildfire insurance crisis, by bowing to industry pressure to raise rates, and creating other unnecessary and dangerous risks that could sabotage the insurance market and put consumers in even more jeopardy. Meanwhile, candidate for insurance commissioner, Assemblymember Marc Levine, has a different, comprehensive, and more consumer-friendly approach. 

Here are the key issues at play for Californians as the campaign for insurance commissioner enters 2022:

The insurance industry: Raising rates, fighting transparency, and trying to undermine the independence of the office of the insurance commissioner.

  • Writing off entire regions of the state, refusing to sell homeowner insurance in areas threatened by wildfires, or raising rates to the point where nobody can afford them. 
  • Trying to set and raise their own rates without transparency (which is required by law), undermining the fundamental purpose of Proposition 103 (passed by voters in 1998 to create an independent, elected insurance commissioner with oversight of the insurance industry). 

Ricardo Lara: Bowing to insurance companies, making troubling decisions that aren’t in the interest of consumers and only make the crisis worse.

  • Allowing the industry to raise rates: Lara approved insurance industry requests to raise rates, and the industry subsequently increased the cost of coverage for certain consumers by as much as 14 percent
  • Out of touch on cancellations: Lara recently tried to declare victory after a reduction in insurance policy cancellations. But the reduction only took place because of a temporary moratorium mandated by state law, not because insurance companies had decided to change their approach long term. Moreover, insurance companies had already moved on to their next priority: raising rates on thousands of Californians. Lara’s premature celebration shows just how out of touch he is on the issue. 
  • FAIR Plan destabilization: Lara’s only solution has been to push more people and insurance needs onto the State’s “FAIR Plan,” which is supposed to be a plan of last resort. Experts have pointed out that this could create a future crisis in the form of a massive default or need for a taxpayer bailout. The FAIR Plan’s own president said straining the plan as such “would negatively impact consumers and further destabilize the voluntary insurance marketplace.” 

Marc Levine: Taking on the insurance industry, offering a comprehensive, responsible, consumer-friendly plan to stabilize the crisis.

  • Create a new Wildfire Insurance Authority, much like our state’s Earthquake Authority, to reduce risk, decrease costs, ensure accountability of the industry, create more stability and certainty in the market, and protect consumers. 
  • Guarantee homeowner insurance to any California homeowner who hardens their home against wildfires. 
  • Provide a home hardening grant program of up to $10,000 per home to pay for implementing home hardening measures. 

The insurance industry is currently pushing back on Levine’s plan because they don’t want an insurance commissioner who will hold them accountable.