New California regulation requires insurance companies to offer coverage in high-risk areas

[BumRushDaShow]

Source: The Hill

12/31/24 4:16 PM ET


California insurers will be required to sell coverage in wildfire-prone regions that have seen an insurer exodus in recent years, state Insurance Commissioner Ricardo Lara announced Monday.

Under the new regulations, companies must make their services available in high-risk areas to do business in the state, the first such requirement in California history. Insurers must write policies covering at least 85 percent of their statewide market share in those vulnerable regions, increasing such coverage by 5 percent increments every two years until they reach that threshold, Lara said.

The commissioner’s office said the requirement will be limited to California, so in-state consumers will not be on the hook for the insurance costs of other high-risk areas, like the Gulf Coast.

Lara said the rule aims to keep insurers from “model-shopping,” the practice of using a higher-rate model for consumers and a separate model that lowers reinsurance costs for the insurers. Under the California regulations, insurers will be required to use a single model.

Read more: https://thehill.com/policy/energy-environment/5061625-california-insurers-regulations-high-risk-areas-coverage/