California E&S Insurance

The following submission statement was provided by /u/wiredmagazine: --- If this estimate holds true, it will test insurers’ commitment to a market that has been teetering on the verge of collapse for the better part of a decade now. Over the past five years, California has become a poster child for what climate-fueled weather disasters can do to a state’s home insurance market. Following a rash of historic wildfires in [2017](https://www.nytimes.com/interactive/2017/10/21/us/california-fire-damage-map.html) and [2018](https://grist.org/article/californias-camp-fire-was-the-most-expensive-natural-disaster-worldwide-in-2018/), insurance companies have [fled the state](https://grist.org/housing/state-farm-california-insurance-wildfire/), [dropped tens of thousands of customers](https://grist.org/economics/in-wildfire-prone-areas-homeowners-are-learning-theyre-uninsurable/) in flammable areas, and raised prices by [double-digit percentages](https://finance.yahoo.com/news/california-homeowners-feeling-crushed-double-100700275.html). Until recently, elected officials have taken few major steps to address the crisis. But late last month, after more than a year of drafting, California’s insurance commissioner unveiled a set of reforms that he claimed will bring companies back into the fold as they take effect this year. “This is a historic moment for California,” said Ricardo Lara, the state’s insurance commissioner, when he revealed the rules in December. “With input from thousands of residents throughout California, this reform balances protecting consumers with the need to strengthen our market against climate risks.” The rules come after months of debate among state insurance officials, lawmakers, insurance companies, and consumer advocates. The biggest change is that California will now require many insurance companies to do more business in what the state calls “distressed areas,” the fire-prone scrubland and mountain regions where insurers are now hiking prices and dropping customers. Companies will soon have to ensure that their market share in these areas is at least 85 percent of their total statewide market share—in other words, if a company controls 10 percent of the state’s insurance market, it must control at least 8.5 percent of the market in fire-prone areas. This mandate should push big companies like State Farm and Allstate to pick up customers they’ve dropped in flammable regions like the mountainous north of the state.  But this trade-off has some residents in fire-prone areas worried. Insurance companies might now have to offer more policies in flammable zones, but they also have more latitude to increase prices. “I’m not optimistic that it will improve the experience of the consumer, as the insurers can now pass certain costs onto consumers, which I’m expecting will result in higher premiums,” said Jason Lloyd, who moved to mountainous Lake County last spring. He and his wife came to the area because they wanted to be closer to his wife’s family, but when they made an offer on a home, they learned that they would have to pay more than $8,000 a year for insurance, or else go to the California FAIR Plan, a state-run insurance program that offers minimal coverage. Read more: [https://www.wired.com/story/the-los-angeles-fires-will-put-californias-new-insurance-rules-to-the-test/](https://www.wired.com/story/the-los-angeles-fires-will-put-californias-new-insurance-rules-to-the-test/) --- Please reply to OP's comment here: https://old.reddit.com/r/Futurology/comments/1hxmrz0/the_los_angeles_fires_will_put_californias_new/m6ad1om/

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