California insurance commissioner says new coverage plans are needed to lure companies back to the state
If you live in California, it's likely obvious that there's an insurance crisis and the most recent casualties are survivors of the Palisades and Eaton fires.
Instability and uncertainty have caused insurance companies to leave the state, and homeowners are left picking up the pieces. A main reason why insurance companies are no longer wanting to do business is because of the increased fire danger all year round.
"Insurance touches every sector of every part of every sector of our economy and climate change is really upending every bit of that," said California Insurance Commissioner Ricardo Lara.
The California Department of Insurance recently hosted the Global Sustainable Insurance Summit in Long Beach, bringing insurance experts, environmental experts and academia together. KCAL News spoke with Lara at the conference, which was designed to be a meeting of the minds.
Lara said to keep insurance available and affordable, homes need to become more resilient, and regulators need to do more to entice insurers to return to California. One idea being debated is new coverages like parametric insurance.
Parametric insurance pays claims based on the level of a disaster rather than the value of the loss. Payouts would be determined by the severity of the fire or weather event, regardless of the amount of damage to a home.
For policyholders, some could get money for losses they didn't incur, while others might find their payouts fall short of the cost to rebuild. Parametric policies are attractive to insurers because their costs would be more predictable.
Meanwhile, the insurance industry is funding disaster research of its own and is sharing its findings with lawmakers and regulators alike. Given the challenges faced by survivors in the Pacific Palisades and Altadena, Lara welcomes their findings and suggestions.
He said his hope is to empower consumers to "build back better and smarter" so the same mistakes aren't repeated in the years to come.