California's leading insurance regulator has stated that the state's residents are experiencing increased insurance costs due to climate change-induced fires. Insurance Commissioner Ricardo Lara made this announcement in a press release issued on March 14.
"My Sustainable Insurance Strategy is intended to address decades-long neglected issues," said Lara. "Under outdated rules, the growth of climate-driven mega fires has supercharged insurance costs for many Californians while making insurance harder to find. We can no longer look solely to the past as a guide to the future. My strategy will help modernize our marketplace, restoring options for consumers while safeguarding the independent, transparent review of rate filings by Department of Insurance experts, which is a bedrock principle of California law."
Lara's comments were made during the announcement of new draft "catastrophe modeling and ratemaking" insurance rules.
According to ABC, California residents have been grappling with escalating insurance costs and, in some instances, finding it difficult to secure coverage. Christina Habib, a resident of Rancho Cordova, revealed that her latest car insurance bill had more than doubled from what she was initially paying. Her monthly payment had risen from $136 to approximately $360 - an annual increase exceeding $2,600. "It is very hard. I depend on my car quite a bit," said Habib. The California Department of Insurance responded to ABC stating: "Commissioner Lara is committed to using every tool to keep insurance rates fair and affordable while improving the availability of insurance throughout the state."
The Insurance Information Institute (III) posted that abuses within the legal system are jeopardizing the affordability and accessibility of insurance. "Legal system abuse occurs when policyholders, plaintiff attorneys, or other third parties use fraudulent or unnecessary tactics in pursuing an insurance claim payout, increasing the time and cost of settling insurance claims," stated III. These practices can include seeking outsized payouts and filing baseless claims, which ultimately result in higher insurance costs for policyholders.
Lara was elected as California’s 8th Insurance Commissioner in 2018, as per the Department of Insurance’s website. Raised by immigrant parents in East Los Angeles, Lara is the first openly gay individual to be elected to a statewide office in California. Prior to this role, he served as a member of the California Legislature.