Opinion: Californians deserve clarity on what’s driving skyrocketing insurance costs
Situation change has thrown insurance markets into dysfunction and the situation is about to get more dire As the epicenter of a global insurance situation it is critical that California formulates a strong response Creating and funding general catastrophe models like the one called for in California s Senate Bill is a good start It seeks a model that would help regulators insurers and others assess wildfire vulnerability and future losses Under the Trump administration the federal governing body is abandoning its responsibility to help communities facing environment catastrophe It s shifting costs onto state governments by gutting FEMA and slashing funding for crucial weather input and conditions adaptation Various businesses including insurance companies rely heavily on this statistics These harmful federal cuts are leaving the community vulnerable General catastrophe models like the one proposed in SB can serve as a check on the proprietary black box threat prediction models insurers use to justify rate increases and to conceal information from customers about how to reduce liability California has smartly invested billions of dollars in wildfire mitigation over the past decade Insurers should be required to factor that into their underwriting Unfortunately a bill requiring them to do so stalled in the California Senate last session exacerbating concerns over whether Californians will be able to access the insurance region after January s devastating wildfires Community catastrophe models can help solve these problems By providing greater transparency around modeling they can blunt the negative fallout of our insurance problem for consumers By collecting sophisticated granular information about surroundings exposure these populace models can help inform and drive greater populace outlay in surroundings resilience This evidence can be used to inform ruling body investments in vulnerability reduction such as ecological forest management and floodplain management which will likely make insurance markets much healthier over time Without a populace alternative the proprietary models used by insurance companies are what we are left with There is little information about the inputs used in these private models and they have been shown to have big flaws Analyses of a few of the majority commonly used proprietary threat modelers from insurance companies have revealed glaring inconsistencies that could increase costs for Californians and elevate the risks for homeowners In a March review outlining a road to recovery from the Los Angeles wildfires researchers at UCLA and the University of Southern California called for more reliable statistics and stronger coordination between administration agencies the insurance sector and individual households They argued for substantial investments in environment resilience and urged that those investments be incorporated into insurance models A general catastrophe model would be useful in supporting all of that work It would also help guarantee that Californians see the benefits of the mitigation investments they are making through more widely available and affordable insurance policies Related Articles Her miscarriage revealed the limits of California s abortion protections Where you live matters State Farm seeks to boost California home insurance rate hike to Document When a neighborhood floods foreclosures often follow Why situation pitfall could affect your credit points for buying a home State Farm wins first-ever emergency rate hike in California During the Biden administration the Federal Insurance Office recommended that state insurance offices build a platform to collaborate on catastrophe model details and methodology Biden s White House even floated the concept of a national catastrophe model to host that effort Trump is now dismantling all of the federal agencies that might have housed such a platform while also failing to act on Gov Gavin Newsom s request for federal aid for the L A wildfires With the federal regime no longer a reliable partner it is more major than ever that states like California take the lead in protecting consumers Jordan Haedtler is a environment financial procedures strategist with State Cabinet and a former legislative staffer in the state Assembly He wrote this commentary for CalMatters
