Since 2022, seven of the state's top 12 insurers have paused or
restricted new business, including State Farm and Liberty
Mutual, and the government's Fair Access to Insurance
Requirements (FAIR) Plan, intended as an insurer of last resort,
has risen to a 3% share of California's market.
"We are at a major crossroads on insurance after multiple years
of wildfires and storms intensified by the threat of climate
change," Lara said in a statement.
The measures by the state's insurance regulator follow an
executive order by Governor Gavin Newsom urging regulatory
action to expand coverage in underserved areas, account for
catastrophe risks in rates, and keep the FAIR Plan solvent.
A report by broker Gallagher Re in July said U.S. property
catastrophe reinsurance rates rose by as much as 50% at a key
July 1 renewal date, with states such as California and Florida
increasingly hit by wildfires and hurricanes due in part to
climate change.
The continued retreat of larger insurance carriers from the
California residential property insurance market signals ongoing
regulatory constraints, rising cost inflation, and higher
catastrophe losses, credit rating agency Fitch said in a note
earlier this year.
(Reporting by Deep Vakil in Bengaluru; Editing by Jamie Freed)
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