California homeowners hope to take a break from their home insurance premiums soon.
The 17% rate was chosen to balance consumer protection and company financial stability, he said. Rate increases remain temporary and are subject to further review.
The state farm emergency fee hike will take effect June 1, with a full hearing scheduled for future judges.
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In a statement, Lara said California is “in a statewide insurance crisis, affecting millions of Californians.”
The survey found that rates rose more than 96% of policyholders who have endured premium hikes in the past few years.
Rates expected to rise
Home insurance costs in the state could continue to increase for the next 10-20 years. Michael Walla, director of Stanford University’s Climate and Energy Policy Program, was projected in a recent panel in Sacramento called “Strengthening the California Insurance Market: Expanding Access and Stability,” hosted by the California Real Estate Center (CCRE).
Walla said the industry should be honest with people about the possibility of rising insurance costs in the near future.
David Russell, panelist at the Nordsridge Center for Risk Management and Insurance, told homeowners to expect increased statewide premiums, saying areas with lower risk of fires and other disasters should subsidize areas at greater risk.
“In high-risk areas, they need to raise someone else’s premium to afford to guarantee,” he said during the panel. “There’s a cost sharing issue.”
According to the plan, fairplan risk exposures increased from $50 billion in 2018 to $458 billion in September 2024.
Founded in 1968, California Fairplan is a fire insurance program funded by insurers operating in the state, offering basic coverage to high-risk property owners who are unable to obtain insurance in the regular insurance market.
John Norwood, chief lobbyist at California’s independent insurance agency and broker, said fair plans should be overstated by moving policyholders to other insurers to provide better overall coverage across the state.
One way the state has adopted to deal with the crisis is to require insurance companies to ensure more homes in a high-risk environment.
Reducing insurance risks in California
CCRE panelists pointed out the need to reduce risk to support the California insurance market.
For example, Wala called for government and insurance incentives to promote “home hardening,” namely protecting the home from the threat of wildfires.
Norwood believes that home hardening regulations should be implemented by states.
“Currently, insurance commissioners have ‘safe from fires’ regulations, so businesses are requesting that discounts be offered for home hardening. However, if the fee is not sufficient, we cannot actually offer a discount.
