By Julia Zeigler
On December 20, 2021, the California Department of Insurance (DOI) released a new report analyzing data it collected on the number of new, renewed, and non-renewed policies issued by insurance companies writing $5 million or more in premium in homeowners and dwelling fire lines of insurance from January 1 to December 31, 2020. The report also contains data from the FAIR Plan, California’s insurer of last resort. The report shows that the number of homeowners non-renewed by insurance companies fell by 10 percent statewide in 2020 compared to the previous year. According to Insurance Commissioner, Ricardo Lara’s press release, 80% of the statewide reduction was because of mandatory moratoriums by Commissioner Lara.
The number of non-renewals by insurance companies fell from 235,597 in 2019 to 212,7287 in 2020 and the number of new and renewed homeowners’ policies issued by the voluntary market increased by 82,635. Data shows that areas with the greatest risk of wildfires experienced higher rates of non-renewals. The FAIR Plan, an association made up of insurance companies that serve as California’s “insurer of last resort,” provides insurance to those who could not find an insurance company willing to write the coverage. This number increased by 49,049 policies in 2020.
Areas in the state under moratoriums saw non-renewals fall by nearly 20 percent, compared to a less than three percent decrease in areas not under moratorium. According to the Commissioner, several major insurance companies, including Allstate, CSAA, and Farmers, have told the Department of Insurance that they will increase the number of new homeowner’s policies written in the state and cease or limit non-renewals. In addition, recent insurance company rate filings approved by DOI have significantly expanded insurer-recognized mitigation efforts made by consumers and grown discount offerings, up to 20 percent for wildfire hardened homes.
In 2019, Commissioner Lara ordered the FAIR Plan to raise homeowners’ coverage limits to keep pace with increasing home values in California. The FAIR Plan resisted the Commissioner’s Order, but Los Angeles Superior Court Judge Strobel ruled in California Fair Plan Association v. Lara, Case No. 19STCP05434, in July that the Commissioner does have this authority.