As Businessman and investor Kevin O’Leary says, California, now dealing with an insurance crisis, is the most mismanaged state in the union. The insurance crisis is in response to a major State Farm announcement that it will discontinue coverage for about 72,000 homes and apartments because of inflation and regulatory costs.
State Farm is the state’s largest home insurance provider. Like everything in socialist California, insurance costs are high.
California’s insurance commissioner, Ricardo Lara, told KABC in an interview on Friday that he doesn’t want to overregulate companies. It sounds like that ship has passed. State Farm listed the reasons for the cancelations as inflation and regulatory costs. Lara said he would now investigate State Farm’s finances. That sounds ominous.
Lara said that insurance companies are not like utilities. The law can’t keep them here, and they could leave, so he doesn’t want to go too far. Lara knows overregulation will force them out of the state, but others disagree.
Lara reminded Californians that when California regulated after the Northridge earthquake, they dropped earthquake insurance in California.
Lara wants to enact the largest insurance reform in more than 30 years in California with modeling changes.
He will change insurance companies’ models for determining risk, but critics want him to go further. Carmen Balber, executive director of Consumer Watchdog, wants regulations to mandate that companies give insurance to everyone who does the right thing. They say modeling doesn’t work and has increased Florida’s insurance costs by two to three times what they were.
Last year, State Farm said they would not insure new homes because of “historic” increases in construction costs and inflation. They then raised rates by 20% for existing customers.
Allstate also paused new home insurance policies in California due to wildfires and the high costs of doing business in California. Seven of the twelve largest insurance companies have paused or restricted new homeowner’s policies this past year.
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