Gov. Gavin Newsom issued an executive order Thursday directing California’s Insurance Commissioner to expand coverage options for homeowners while keeping plans affordable.
The order comes after both State Farm and Allstate have stopped issuing new policies over the threat of destructive wildfires.
“We can expect more of this to come in the short term,” Newsom said. “That is why it is critical for the Insurance Commissioner to act quickly to help stabilize the state’s marketplace, while maintaining consumer protections and fair rates.”
The order specifically directs Insurance Commissioner Ricardo Lara to consider “potential revisions to the way catastrophe risks and insurer costs are accounted for.”
Insurers have sought to use forward-looking catastrophe models, rather than past losses, to set insurance rates, as they are already allowed to do for earthquakes.
“This is yet another example of how climate change is directly threatening our communities and livelihoods. It is critical that California’s insurance market works to protect homes and businesses in every corner of our state,” Newsom said.
The executive order was praised by Republicans in the Legislature, although they said action should have been take “years ago.”
“I am encouraged to see the governor and Insurance Commissioner taking the insurance crisis seriously,” said Sen. Brian Jones, the minority leader.
In August, Senate Republicans sent a letter on behalf of their constituents demanding that both Newsom and Lara take immediate action to fix the state’s insurance market.
California’s insurance problems mirror those in Florida, where repeated hurricanes have forced private insurers out of the market and forced state intervention.
