California use to only allow a max of 7% increase a year on homeowners insurance… and only base premiums on past payouts on a property. Not anymore.
“California will let insurance companies consider climate change when setting their prices, the state’s chief regulator announced Thursday, a move aimed at preventing insurers from fleeing the state over fears of massive losses from wildfires and other natural disasters. The rule change could mean higher rates for homeowners who are already seeing dramatic increases. Eight insurance companies doing business in California have requested rate increases of at least 20% or higher this year, according to the California Department of Insurance,” AP news reported.
“Modernizing our insurance market is not going to be easy or happen overnight. We are in really unchartered territory and we must make difficult choices when the world is changing rapidly.” California Insurance Commissioner Ricardo Lara said.
“Insurers have advanced a very powerful argument that the past is not as good a predictor of the future as it used to be,” said Amy Bach, executive director of United Policyholders. “I think the (Insurance) department did what it needed to do to try to restore a viable market. We don’t have a viable market right now in this state in a lot of areas.”
Florida and Louisiana already have a homeowners insurance crisis with companies fleeing the states. The 9th National Risk Assessment for Homeowners Insurance found 1/4 of all homes in the nation are underpriced for climate risk insurance.
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