The Southland Regional Association of Realtors hosted a discussion last week about the growing California insurance crisis.
The event held March 28 at the association’s offices in Valencia featured keynote speaker Rob Obedoza, Department of Insurance lead for Santa Barbara, Ventura and parts of Los Angeles County, including Pacific Palisades.
Obedoza touched on many topics about the crisis, including the current state of the insurance market and upcoming legislative proposals to increase insurance availability.
“So as of right now, or as of the middle this month, actually, over 27,000 claims have at least been partially paid out to wildfire survivors, which equates to over $12.1 billion that have already been paid out to those survivors as well,” Obedoza said.
He added that people went to domain carriers, talked to their insurance companies and walked away with “good” checks in hand to start the rebuilding process.
Speaking to the Realtors, Obedoza said that the state insurance commissioner has the power to declare a one-year moratorium on non-renewals and cancelations for people affected, along with the adjacent ZIP codes.
A one-year moratorium prevents homeowners insurance cancellations and non-renewals in affected areas of Southern California, according to the California Department of Insurance website.
“This moratorium does not only apply to those who have been affected by those fires, but even those standing homes within those ZIP codes and those adjacent ZIP codes as well. So, if you know somebody who may have been up for renewal or cancelation, that’s going to be postponed for at least a year. This is going to give them time to consider their options. Take a look and see what else is out there,” Obedoza said.
Obedoza also discussed the general insurance market.
He began with a statistic stating that in California, about seven to 12 top insurance companies cover 85% of California’s insurance, and some of the major carriers, like State Farm, have either stopped writing or limited new policies since 2022.
“This has left homeowners with fewer options in the market, and a lot of them opting for the California FAIR Plan, which has grown to over 4% of the California market, whereas just a couple of years ago, we’re only in about 2% of the California market,” Obedoza said.
The California FAIR Plan was established so that all California property owners have access to some kind of basic fire insurance when access to coverage in the traditional market is not available through no fault of the property owner, according to the official California FAIR Plan website.
Nancy Starczyk, chairwoman of Santa Clarita Valley Region of Southland Association of Realtors, added that a reason the insurance market is in the state it’s in is because the “modeling” has not been modified since 1993.
“It hasn’t been adjusted since 1993 and they’re looking at previous history before 1993, but as I was just saying, population has increased, infrastructure has increased, and there’s a lot that’s happened in the last 35 years or so that they have not taken into account, but they are doing it now, so I think that will help. I really do and I think we’re suffering as a result of the antiquated modeling that they’ve been using,” Starczyk said.
“I believe we do need to have the legislators, the insurance companies, the city and the county governments work with the homeowners and see what can be accomplished. But I think it’s going to take a joint effort of everybody,” Starczyk said.
Giving advice to clients who are directly affected by this, Starczyk said the main thing to do is educate themselves on what is best for them.
“I think just educating yourself and talking to multiple people, not just one agent, but talking to several, I think you just need to be educated and understand … if you go to the website for the California Department of Insurance, there is so much information, and by reading through that, I think that the homeowner will feel better,” Starczyk said. “Because they give you alternatives. If you’re canceled, if you’re seeing they won’t renew your policy, or if your policy has doubled or tripled, you can contact them at the Department of Insurance.”
