Governor Newsom Calls for Swift Action on Property Insurance Rate Increases

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Newsom wants lawmakers to hasten the approval processes for insurers to improve the market

California Governor Gavin Newsom has issued a call to lawmakers, urging them to expedite the approval processes for property insurance companies that are seeking to increase their rates.

The governor feels the market overhaul is too slow

Newsom recently addressed the press in Sacramento to announce the push he is making for legislation to require the California Department of Insurance to set a limit of no longer than 60 days for the completion of rate-filing reviews.

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Newsom’s resolve to overcome the property insurance crisis is highlighted by his intention to expedite the bill even before California Insurance Commissioner Ricardo Lara’s top-to-bottom overhaul of the market that is expected to be completed by the close of 2024.

Moving property insurance market changes along faster

“We’ve got to move this process along,” insisted Newsom. “We can’t wait until December. We can’t.”

This move has arrived as home insurers in the state have been restricting, ceasing, or withdrawing coverage en masse, following widespread catastrophic wildfires season after season. This has caused heavy reliance on the FAIR plan, the state-backed coverage of last resort, which now carries a tremendous $300 billion in exposure. 

Lara and his agency have been driving ahead with an effort to stabilize the market through substantial changes that are intended to provide insurers with a larger amount of freedom to change their rates as needed. This is in exchange for their agreement to keep up coverage for properties located within wildfire zones.

“Deeply mindful”

In his media address, Newsom said that he was “deeply mindful” of the challenge associated with the overhaul of existing rules in a property insurance market this large and established and shared his frustration over the slow movement seen in implementation of needed changes.

“It should not take this long for emergency regulations,” said Newsom. “I almost have the temptation to do an additional executive order, but under the circumstances, I think working with the legislature on a trailer bill is more appropriate.”

Lara did acknowledge that “there is more to do,” in a post he made on X (previously known as Twitter).

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