R.J. Lehmann on California’s Insurance Market
ICLE Editor-in-Chief R.J. Lehmann was quoted by Reason in a story about California’s fragile property-insurance market. You can read the full piece here.
As of November 2022, nearly 2.4 million policies were in ZIP codes covered by non-renewal moratoriums, according to a September 2023 report by the International Center for Law and Economics (ICLE).
…Insurers’ non-renewal rates increased 36 percent in the years following the 2017 and 2018 fires, according to ICLE. Over the same period, the number of policies written by FAIR, the state’s insurer of last resort, increased by 225 percent.
…The trouble is that reinsurance rates (which are not regulated under Prop. 103) have been rising to account for increased wildfire risk. The concentration of wildfire losses in recent years and the rising risk of future wildfire losses means that basing premiums on past averages of wildfire losses is “wholly inadequate” to cover insurers’ risks, says the ICLE report.
…”It’s a step in the right direction,” says Lehmann. “Broadly speaking, the insurance commissioner, to the extent that he can, has been reasonable at allowing rate increases for companies that want to continue to do business in California.”