How does California, and the fact that they’re pulling out of California …. where are they going? How does California compare to other states? Because we’re not the only state that has catastrophic wildfires. We’re not Florida. They have flooding, they have hurricanes. The South has hurricanes. You’ve got tornadoes in the Midwest. We’re not the only state with these types of issues.

Right.

So why does it feel like the insurance industry is so different in California?

One of the things that goes on behind the scenes with insurance companies is that we have the California Department of Insurance; we have the Commissioner, which is an elected position. And, part of that commissioner’s job is to look at rate and to approve whether an insurance company or not should be increasing rate.

Prop 103, which some of us are familiar with, was passed several years back. One of the components of the Prop 103 legislation was that any time an insurance company wants to raise their rates beyond 6.9%, so if they want to increase their rate 7% or more, they have to go through an extensive process to basically prove or show the California Department of Insurance why they need rate.

It’s interesting because it’s talking to the insurance companies and going, well, if we’re having to go to the California Fair Plan, we’re seeing rates go up 50-100% …. the worst case is 200 or 300% …. Why can’t these insurance companies, on the private side, be able to stay in the market and increase their rates 20, 30%? Because at the end of the day, I think anyone would much rather pay 20 or 30% than 200% or 100%

Wow. So, it sounds like the solution is to allow insurance companies to increase their rates more because that would still be less than what people are faced with on the Fair Plan. But they’re only able to increase by 6.9% every year. What if they just did that every year? 6.9% in four years, you’d have roughly what you’d need.

Tune in for Part 10 of the State of Fire Insurance in Tuolumne County, where Justin and Ryan discuss the Impact of Rate Regulation on Insurance Companies + the Reinsurance Market and its Impact on Rates

We’d be happy to review your insurance coverage options with you! Give us a call at (209) 532-5102 or visit https://caldwell-insurance.com.