California homeowners face insurance loss amid market instability

In recent years, many Californians have faced the loss of their home insurance, a situation exacerbated by the COVID pandemic. The crisis began in 1988 when Proposition 103 was approved, capping rate increases for homeowners' policies. This led to a freeze on rate increases during the pandemic, causing insurance carriers to incur losses and subsequently cancel policies. Homeowners were left with limited options, including non-admitted carriers or California's Fair Plan, which is not government-funded but relies on contributions from regulated insurers. Michael and Christy Daneau are among those affected, having lost their home in the 2018 Camp Fire and another in the recent Park Fire. They struggled with high premiums and limited coverage options, ultimately deciding to forgo insurance altogether. The Fair Plan, which has seen a significant increase in policies, is now overwhelmed and may not be able to cover catastrophic losses. Experts believe that a new sustainable insurance model could stabilize the market by allowing insurers to adjust rates based on climate and catastrophic risk. This change is crucial as the current cap on rate increases has hindered insurers' ability to remain profitable, leading to a mass exodus from the state. Finding a balance between protecting homeowners and ensuring the profitability of insurance companies is essential. The proposed changes aim to create a more stable insurance market, potentially fostering competition that could lower prices in the long run.