Pro-homeowner insurance bill working through California legislature
Pro-homeowner insurance bills are moving through California legislature
Two new insurance laws are moving through state legislature and in favor of those in need of fire coverage.
SACRAMENTO, Calif. - Two pro-homeowner insurance bills are moving the state legislature and it's good news for those in need of fire coverage.
Working its way through the legislature
What we know:
The bills have already passed the Democrat-dominated Assembly, and are now in the hands of the state Senate, where Democrats also have a super majority.
If the Senate agrees with the Assembly, the governor will have an opportunity to make the FAIR plan more stable and begin setting course for a more normalized insurance market.
One bill allows California's insurer of last report the ability to borrow money or sell catastrophe bonds, to assure that the FAIR Plan can pay all legitimate claims. Both the California Infrastructure and Economic Development Bank Insurance Commission would have to approve all such borrowing.
What they're saying:
Since the insurance industry controls the FAIR Plan, any misuse or financial shenanigans would backfire, according to multi-line, independent agent Karl Susman.
"In the event that they default on paying back any of these loans, the private insurance companies are on the hook for it anyway," said independent insurance agent Karl Susman.
Consumer Watchdog advocate Carmen Balber agrees.
"This is not access to the California bank that taxpayers or policyholders will have to repay. This is still an obligation of the insurance companies to repay the FAIR Plan," Balber.
But, the Insurance Commissioner appears to have tried to give insurers who control the FAIR Plan, a way out.
"Policyholders of those insurance companies are being asked to foot part of that bill and that is both unfair and illegal which is why Consumer Watchdog has sued the Department of Insurance for issuing a fiat saying insurance companies can pass those costs on to their policy holders," said Balber. "Even people who might have never had a FAIR Plan claim, might end up paying higher rates because of claims made elsewhere," said Susman.
The other bill would require insurance agents and brokers to shop what's left of the private market for their customers before automatically putting them into the FAIR Plan, which costs more and covers less. "It's forcing brokers to attest that they have made a real attempt to get the person coverage over than the FAIR Plan," said Susman.
It will also require brokers and agents to fully inform FAIR Plan customers, in large bold-face type, to keep shopping for private insurance. "I think we'll be seeing it enacted pretty quick," said Susman
What's next:
It's almost certain that the state Senate will pass the bill, which then requires the governor, who has presidential ambitions, to sign a bill insurers may not want to live with but may accept for now.