California County Officials Request State of Emergency Declaration for ‘Insurance Crisis’

A house untouched by flames amid scorched hills in the village of El Cariso near Lake Elsinore, Calif., on Sept. 12 after the Airport fire raced through. Etienne Laurent/AFP via Getty Images

San Mateo County supervisors passed a resolution on Oct. 8 asking California officials to declare a state of emergency due to the lack of homeowner’s insurance in the state after dozens of companies stopped writing policies in recent years.

“At this point, it’s not an exaggeration to say the state’s facing an insurance crisis of both affordability and availability,” Supervisor Ray Mueller said while introducing the resolution at the board meeting.

Insurance companies became more reluctant to write policies in the Golden State after losses from wildfires skyrocketed over the past seven years. And strict regulations that limit premium increases are contributing to an exodus of insurers from California, according to the industry.

The resolution—approved on a unanimous vote—asks Gov. Gavin Newsom, Insurance Commissioner Ricardo Lara, and the Legislature to immediately move to stabilize the state’s residential and commercial property markets.

Newsom’s office responded to The Epoch Times’ requests for comment by pointing to an executive order signed by the governor last year requesting swift action from the insurance department and a June press release expressing support for Lara’s “Sustainable Insurance Strategy“ and newly announced regulatory reforms. The reforms include allowing insurers to use different pricing models in exchange for writing more policies in distressed areas.

Mueller called the current situation an “incredible problem” and a “huge issue.”

“The ripple effects on our economy are already being felt in the housing market, where it has the potential to slow or halt transactions and development,” Mueller said.

As most mortgages require borrowers to carry homeowner’s insurance, high insurance prices and the high rate of nonrenewals can hurt home sales. Nearly 7 percent of sales fell through because the buyer could not obtain affordable insurance, according to a 2023 housing market study by the California Association of Realtors.

Policyholders who receive nonrenewal notifications have few options other than the FAIR plan—the state’s insurer of last resort, financially backed by all insurance companies—which offers less coverage for double or triple the price of conventional coverage, Mueller said during the hearing. As more people are forced onto the FAIR plan, some are concerned about its fiscal stability.

According to the resolution, the reduction of options is having a “direct negative effect” on California’s homeowners, businesses, farmers, and ranchers.

“Once homeowners and businesses lose their insurance, they face the daunting and confusing task of finding a new insurer,” Mueller said.

Some are forced to sell their homes or businesses, according to the newly passed measure.

The resolution says urgent solutions are needed because the insurance problem is “exacerbating the state’s critical housing shortage and particularly impacting the most vulnerable, including young families and those on fixed incomes.”

A retired fire marshal testified in support of the measure.

“Insurance nonrenewals are a crisis for homeowners,” Denise Enea, executive director of Fire Safe San Mateo County, said during the hearing.

The resolution highlights laws enacted by Proposition 103—passed by voters in 1988 to regulate the insurance market to keep rates “fair and affordable.”

Supervisors are requesting that the state immediately begin working to expand insurance options and help ensure long-term access while maintaining the FAIR plan’s solvency.

Lawmakers are also asking the state’s insurance department to improve the speed and transparency of its rate approval process and to account for more factors—such as revising how risks and costs are included in calculations—when considering requests.

The insurance commissioner announced in August plans to update regulations.

“Consumers are hurting, businesses continue to lose coverage, wildfires are ravaging our state—and we do not have the luxury of time,” Lara said in a statement at the time. “I am ultimately responsible for fixing this crisis, and I am moving forward to meet my commitment to complete long-needed reforms this year.”

The resolution, however, said it “may take years for these regulations to impact the market” and that lawsuits could delay the timeline further.

Other counties—including Shasta, Placer, and San Bernardino—have enacted similar measures.

City council members in Chino Hills, in San Bernardino County, also urged the state to take emergency action.

The insurance department did not respond to The Epoch Times’ request for comment by publication time.