Rancho Mesa's Lauren Stumpf and Account Executive Jeremy Hoolihan discuss California Insurance Commissioner Ricardo Lara’s emergency property insurance plan, in response to property insurance companies fleeing CA.

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Director/Host: ⁠Lauren Stumpf⁠

Guest: Jeremy Hoolihan

Producer/Editor: Megan Lockhart

Music: "Home" by JHS Pedals, “News Room News” by Spence

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Transcript

Alyssa Burley: Hi. This is Alyssa Burley with Rancho Mesa's Media Communications and Client Services Department. Thank you for listening to today's top Rancho Mesa News. Brought to you by our Safety and Risk Management Network, StudioOne.

Lauren Stumpf: Welcome back, everyone. This is Lauren Stumpf, Marketing and Media Communications Specialist at Rancho Mesa. I am subbing in today as hosts for today's episode while Alyssa is on vacation. So my guest today is Jeremy Hoolihan, Account Executive with Rancho Mesa. He specializes in providing insurance services to the janitorial and maintenance industry. Today, we are going to talk about the California insurance Commissioner, Ricardo Lara's, Emergency Property Insurance Plan. Jeremy, welcome to the show.

Jeremy Hoolihan: Hi, Lauren. It's great to be back in StudioOne and definitely looking forward to chat with you about this very relevant topic here in California.

LS: Great. Well, let's hop into it. So as some of our listeners may be aware of, California Governor Gavin Newsom recently declared property insurance a state of emergency in California based on a mass leave of property insurance companies in California. How has California's insurance commissioner reacted to this?

JH: Right. So this has allowed California Insurance Commissioner Ricardo Lara to strike a deal with the insurance companies to encourage new coverage in the state. The changes are slated to go into effect by the end of 2024. However, the hope is that insurers will begin to write homeowners policies sooner than that. The agreement between Lara and the insurance industry will have insurers return to high risk zones in the state in exchange for relief and current regulations, which would allow insurers to get higher rate increases through the state regulator much faster.

LS: Okay, so what are some of the elements in Lara's plan?

JH: There are eight key regulatory elements on Lara's plan, and this is based on his press release back on September 21st of this year. And I'm going to go through each of them, starting with the first one. Number one, the executive action by the commissioner, or plan, is to transition homeowners and businesses from the Fair Plan back into the normal insurance market, with commitments from insurance companies to cover all parts of California by writing no less than 85% of their statewide market share in high wildfire risk communities. So, for example, if a company writes 20 out of 100 homes statewide, it must write 17 out of 100 homes in distressed areas. The second key element is allowing fair plan policyholders who comply with new, safer wildfire regulations. The first priority to transition into the normal market. So basically rewarding those that are making an attempt or effort. Number three is expediting the department's introduction of new rules for the review of climate catastrophe models that recognize the benefits of wildfire safety and mitigation actions at the state, local, and parcel levels. Number four is directing the Fair Plan to further expand commercial coverage to 20 million per building to close insurance gaps for homeowners associations and conduit of elements to help meet the state's housing goals and to provide required coverage to those larger businesses in the state. Just as a keynote, the current limits are between 7.2 million and 8.4 million, depending on the building. Number five, holding public meetings, exploring incorporating California-only reinsurance costs into rate filings. Number six is improving rate filing procedures. Lara also said that he aims to speed up the overall process by accelerating the pace of rate approvals and that the new state budget includes funds for hiring more staff to process filings. He will also require that intervener filings be made public, which Lara believes will increase transparency and make it easier for more consumer advocates to participate. Number seven, increasing data reporting by the Fair Plan to the department, legislature, and the Governor to monitor progress towards reducing its policyholders. Number eight, ordering changes to the Fair Plan to prevent it from going bankrupt in the case of a extraordinary catastrophic event, including building its reserves and financial safeguards.

LS: Okay, great. So it sounds like Lara plan is hopefully going to deter more insurance companies from leaving California by loosening certain elements of insurance regulations.

JH: Lauren, that's correct. And that is the hope. Under the existing system, insurers need to apply with the Department of Insurance to raise their rates and provide supporting documentation to justify the rate hike. The process would allow consumer advocates to intervene along the way to act as watchdogs in the process, with property owners desperately searching for comprehensive coverage that is affordable, this plan could not come sooner. While this will take time to implement, it is an important step in restoring the property marketplace here in California.

LS: Absolutely. So, Jeremy, if listeners have questions, what's the best way to get in touch with you?

JH: You can reach me via email or phone. My email is the letter J and then H-O-O-L-I-H-A-N at ranchomesa.com or 619-937-0174.

LS: Great. Thank you so much for joining me in StudioOne, Jeremy.

JH: Thanks, Lauren. It's been great chatting with you.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning into our latest episode produced by StudioOne. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.