The Sustainable Insurance Strategy Program

The Sustainable Insurance Strategy Program

The Sustainable Insurance Strategy for California became fully effective on December 24,2024. The strategy was developed by the Office of the California Insurance Commissioner Ricardo Lara with the hope it would stop the exit of insurance companies from this state, as well as make it easier for homeowner policies to be sold. After a review of the plan, I was surprised to see that the one group that will benefit from the new operating plan is the insurance companies and not the policyholders who will be paying for the new program.

At a time when most of the homeowners in California who suffered fire damage are concerned about having a secure roof over their heads, the political motivated State Senators and Assembly members are practicing the fine art of distraction in order to sneak this legislation through.

Let’s take a minute to see how much the insurance companies will benefit.

Streamlining of the rate application process. A part of the improvement of the rate application will consist of hiring more actuaries and analysts. This will do nothing more I believe, than slow down an already time-consuming process and create more government hoops to jump through.

Analysis of streamlining rate application process-It will increase the time required and it will end up costing more in order to pay for the additional payroll.

New risk management tools. This new process will only, once again, benefit the insurance company in relationship to the amount spent on premiums. Ever since the passage of Proposition 103, the expense for reinsurance was not included in the premiums that policyholders pay their insurance company. Now with this new and improved method of enriching the insurance company, you and I will see an increase in our premium expense.

The following is a quote from Consumer Watchdog,

“This plan could drive the price of home insurance up by 40%” stated Jamie Court, president of Consumer Watchdog. “Tellingly the commissioner did not do a cost impact analysis of his plan on consumers. That’s because this plan is of the insurance industry, by the insurance industry, and for the industry. The Commissioner has left no opportunity for the public to comment on the regulation before it is final by issuing it on an emergency basis. It’s the worst type of power grab.”

The insurance commissioner’s office did not discuss the new strategy or its impact on policyholders, specifically the ability to increase available coverage on each policyholder.

Insurance companies will be able to increase coverage in wildfire areas by only a margin of 5% after two years, rather than the 85% previously discussed.

Analysis of the new risk management tools- Once again the analysis results in increased costs for the insured, specifically the increased cost due to the purchase of reinsurance which previously the insurance company paid.

Respectfully submitted,

Norman Lambe

nwlambe@gmail.com