Addressing California's Insurance Crisis

Addressing California's Insurance Crisis

It's extremely concerning how the insurance crisis in California is impacting our communities. Many homeowners are finding themselves without coverage or facing skyrocketing premiums due to the policies implemented by the Insurance Commissioner’s office.

Earlier today, I wrote a letter to Insurance Commissioner Ricardo Lara, urging him to take immediate action to fix the mess that has been made. This issue is leaving countless residents vulnerable, especially as wildfires become more frequent and severe.

Here is my letter:


Dear Commissioner Lara,

I'm writing to express my deep concern about the current state of fire insurance coverage in California. Many residents in my district and across the state are being left vulnerable and uninsured due to the policies under your jurisdiction.

The regulatory decisions you've overseen have driven major insurance providers out of the market or forced them to drastically reduce coverage in high-risk areas. This has left thousands of Californians with no choice but to rely on the FAIR Plan, which offers limited coverage at extremely high rates. For example, when State Farm dropped approximately 1,600 policies in Pacific Palisades before the recent devastating fires, many homeowners were left unprotected. Now, I’m reading that the California Fair Plan is on the brink of insolvency, due to fires in Los Angeles.

The temporary moratoriums you issued on policy cancellations after disasters are simply a short-term fix. Homeowners need long-term, sustainable solutions, not just yearly delays that fail to encourage insurers to return to the market or expand their offerings.

I urge you to take a stronger, more effective approach to fix this crisis:

  • Foster Participation: Allow insurance companies to price risk accurately without excessive restrictions that discourage market participation. Revisiting Proposition 103's rate-setting policies could help attract competition and innovation.
  • Encourage Market Entry: Provide incentives for new insurers to enter the market, such as tax breaks, streamlined approval processes, and subsidies for covering high-risk properties.
  • Promote Innovation: Support the use of advanced technology and data analytics for risk assessment. This could lead to fairer pricing models that reward homeowners for fire prevention efforts rather than punishing them for their location.
  • Increase Transparency: Ensure regulatory changes are made with full public disclosure and input. Premium increases should be clearly justified and publicly reviewed.
  • Support Consumers: Launch educational initiatives to help homeowners understand their insurance options, negotiate coverage, and implement safety measures that can lower their insurance costs.

Commissioner Lara, the current insurance crisis isn't just a policy failure—it's a failure of public trust. Californians deserve better than facing the threat of losing everything with inadequate coverage. I urge you to take immediate action to protect our communities by pursuing a more balanced and market-friendly approach that serves all residents, not just the insurance industry.

I look forward to your response and to seeing meaningful reforms that prioritize the well-being of Californians.

Recent responses