Consumer watchdog criticizes new Lara proposal | Insurance business America
“The commissioner’s whole plan could turn California into Florida.”
Property
By Terry Gangcuangco
Consumer Watchdog has raised concerns that home insurance will remain unaffordable and difficult to obtain for many Californians under Insurance Commissioner Ricardo Lara’s new proposed rules.
According to the consumer advocate, the proposal will result in insurance companies that fail to meet their insurer obligations being “off the hook” provided they take what are deemed to be appropriate measures to comply. In addition, companies can also replace their obligations with alternatives.
“The proposed rules seek to require insurance companies to increase their sales to homeowners in ‘distressed areas,'” noted Consumer Watchdog. “However, the proposal would not require insurance companies to charge a price that consumers can afford, and the requirement could be waived if insurers cannot meet it.”
“In return, insurance companies will receive double-digit price increases for allowing insurance companies to use unverifiable secret algorithms to set prices. This will result in insurance premiums becoming even more unaffordable for many Californians.”
It added that insurance companies will continue to be allowed to “redline” distressed locations.
“Insurance Commissioner Lara’s plan gives insurance companies two years to comply, but they can start charging higher fees immediately,” said Carmen Balber, executive director of Consumer Watchdog.
“If insurance companies can say after two years that they cannot meet their goals, the commissioner can simply move the goalposts. This was the only consumer benefit in Lara’s proposal, but the exceptions swallow the rule.”
Balber continued: “A promise to expand insurance coverage with unaffordable policies will not reinsure California home, condo and apartment owners. What happens when companies fail to meet their obligation because the rewards are beyond the reach of consumers? The Commissioner may waive the obligation.
“The way to guarantee more Californians insurance coverage is to require insurance companies to sell to every homeowner who does the right thing and protects their home from wildfires.” The commissioner’s entire plan could turn California into Florida, where insurance companies get everything they want and people still can’t get coverage.”
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2024-06-13 11:20:26
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