Insurance Hour
KCAA: Insurance Hour (Thu, 29 Aug, 2024)
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VGW Group, forward we're prohibited by law, 18 plus, terms and conditions apply. 1832.org. [MUSIC PLAYING] Buckle up, everyone. You are strapped in and ready for the insurance hour. With me, your host, Carl Sussman. Informing, educating, and entertaining Californians, one policy at a time, this is insurance hour. Hello, hello, everyone. How are you? Hope everyone is doing terrific. I am Carl Sussman and you are listening to insurance hour. We have a full show today and I want to give you all the housekeeping stuff first to be sure you know, phone lines are open, 559-656-0317. You can call or text that number with questions. You can do it right now and we'll get you on the air if you happen to get voicemail. That usually means either there are too many people already in the queue or we are not on the air anymore. Either way, leave a voicemail, leave a detailed message with your question. I will definitely still get to it when we get the next show. Also, you can join our text list. You can just text us at 567-4, Carl. That's 567-365-275, remember it's Carl with a K. And as always, you can find us on podcasts, on YouTube, on X, on Instagram, on all the fun social networks, where we try and keep everybody updated and just try and stay in touch. Get questions from people, shoot out a few answers now and then let's face it, gotta be everywhere, right? And it is not easy. Let me tell you, I have a whole team that helps me try and stay on top of that because people are everywhere. There are so many platforms. So I do try and get back to everybody directly, but the best way again is to use the phone, which is 559-650-317 or if you want to email, you can email questions@insuranceour.com. All right, with all that done, I thought today we would talk a little bit about some of the changes going on in the California insurance marketplace. I know, shocking, there is a lot going on and I realize that insurance might not be the most exciting topic to discuss, but it's a subject that affects all of us deeply, specifically here recently in California. The insurance landscape and our state has been undergoing significant challenges over the past several years. Many of you have experienced these issues firsthand, rising premiums, fewer available policies and increasing reliance on the California Fair Plan and these are not just numbers on a page. These represent real concerns and real anxieties for homeowners, renters, condominium owners and business owners alike. This is impacting everybody at this point. So I want to walk you through why the insurance market is facing these challenges, how we arrived at this point and what is being done to address these issues. A lot is spoiler alert. To do that, we'll start by revisiting a key moment in California's history, the passing of Proposition 103 in 1988. You've heard all about it. We're going to talk a little bit about that. This landmark initiative has had long lasting impacts, both positive and negative on the insurance market in California. After discussing Prop 103, we'll delve into the current challenges and examine the newly introduced California Sustainable Insurance Strategy that has been proposed by California Insurance Commissioner Ricardo Lara. This strategy aims to modernize the insurance system in California, making it more resilient and better equipped to handle the risks that we actually face today. So let's jump in. Little historical context for Proposition 103, to understand the current insurance landscape, we need to go back to 1988. I know, go back to the '80s, a year that changed the course of insurance regulation in California. Prop 103 was introduced as a voter initiative in response to widespread public dissatisfaction with high insurance premiums, specifically auto insurance. Keep in mind that Proposition 103 really was having to do more with auto insurance than property insurance. That was what it was talked about. That was what was being referenced. That was what was getting people riled up. At the time, Californians were dealing with what they perceived as unchecked power by insurance companies with prices rising, higher and higher, and people were having more and more trouble affording coverage. There was strong sentiment that something had to be done with the costs going up. So Proposition 103 was that something. It was a plan with sweeping reforms in the insurance industry. It required, and this was primarily how it was sold, all carriers to roll back, that was the phrase that was used, roll back their rates by 20% to what they were a year before, which would have been 1987. This move was designed to provide immediate premium relief, cost relief to consumers who were paying higher premiums than they were obviously the year before. Additionally, Prop 103 mandated that any future rate increases had to be approved by the California Department of Insurance, effectively placing significant regulation in the hands of the California State Department of Insurance. Another crucial element of Prop 103 was how it restructured the calculation for insurance rates. Prior to the proposition insurance companies had considerable discretion in setting rates, often using factors like where somebody lived, their gender, driving record, frequency of accidents and tickets. Proposition 103 changed that by requiring rates to be based primarily on three factors, driving record, number of miles driven, and the number of years the driver had been licensed. That was it. So it eliminated a lot of the options and a lot of the actuarial figures that insurance companies were utilizing to come up with actual premiums. The change was intended to create a more equitable system where insurance pricing was tied more closely to individual behavior and less to demographic factors, whether that actually had an impact, whether that was actuarially sound or not. However, Prop 103 was well-intentioned, the long-term effects have been traumatic, and in some cases, extremely detrimental to the consumers that it was designed to protect. One of the most significant issues with Prop 103 is its reliance on historical data for setting insurance rates. This approach might've seemed like it made sense at the time, but it has become increasingly problematic as the risks associated with climate change, wildfires, floods, other national disasters have intensified. We're gonna talk a little bit more about Proposition 103. Then we're going to get into where it has taken us from back in the '80s until today. After we take a quick break, remember, if you have questions, please give us a call at 559-656-0317. Send your questions in to questions@insuranceour.com. If you wanna send us a text, go ahead also at 559-650317. You wanna get on our text list to be able to get updates for the insurance market. Just shoot us a text over to 567-4-Carle. It's 567-367-5275. We'll get you on that list, and we will keep you up to date with all the things that you need to know as soon as you need to know that. I promise not to send a ton of stuff. We really do try and keep that pared down to when something significant happens that you need to know about. So let's take our first quick break, and when we are back, we will continue our discussion about Proposition 103 and the impact it has on California, where we're going from here. I'm Carl Susband, and you are learning from Insurance Hour. We'll be back in a flash. (upbeat music) Let's talk about earthquakes for a minute. Look, we know we live in earthquake country here in California. Powerful, devastating earthquakes have happened here before, and science says that they will happen again. They can't tell us exactly when, they can just tell us that it is going to happen. Count on it, prepare for it. Did you know that earthquakes are not covered by your homeowner's insurance policy? You need a separate policy to give you the peace of mind that you will be able to recover without getting financially wiped out the next time we get hit with a big one. There's a great company here in California that will provide you with earthquake coverage you need at a price you can afford. That company is Giovera. I have a policy through Giovera. I really like how easy it is to choose from all of their great coverage options backed by the financial strength that lets me know that they will be here for me when I need them the most. Owning a rental property sounds like a dream until you realize how much work goes into getting it ready. 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So join me and the fun. Sign up now at chumbahassino.com. - Sponsored by Chumba Casino, no purchase necessary. VGW Group, forward we're prohibited by law, 18 plus terms and conditions apply. - Go to getquake.com/insurancehour to learn more. That's getquake.com/insurancehour. Make sure you're ready for the day when the ground shakes again. (upbeat music) - Hello, hello, welcome back. Thank you so much for being here. You are learning from insurance hour. I am your host Carl Sussman. Phone lines are open at 559-650317. You can call or text that number, send your questions into questions@insurancehour.com. Just a quick note, we just have an ad for geo-vara insurance, which is an earthquake insurance company, and I have to tell you personally, I can get my insurance pretty much anywhere as you can imagine. I have my personal home insured with geo-vara. Look, if you're anywhere in California, you've been feeling earthquakes recently. I think I read somewhere that we have had more earthquakes in the last 12 months than typically have been the case in the last 15 years, so things are happening. Probably not a bad idea to check out earthquake insurance options for you. Back to our topic, we are discussing Proposition 103 and the California Sustainable Insurance Strategy, jumping back into where we were with Proposition 103. The requirements based on it were to use historical data, meaning that insurance could not fully account for future risks when they were setting rates. So for example, a wildfire risk has increased dramatically over the past several decades. Yet, insurance companies are forced to rely on data from the past that does not reflect the current future threats. So as a result, many insurance companies have found it difficult to adjust the rates and their underwriting to reflect the true risks of ensuring properties in California. This has led to a significant reduction in the availability of insurance coverage in those areas, as insurers have either raised rates or had to leave the market altogether. When they leave the market, of course, the carriers that are left, premiums continue to rise. We know how this works, right? If you don't have competition, prices go up. The less carriers, the less competition, the higher the prices. Moreover, Proposition 103's rate approval process is notoriously slow and bureaucratic. When an insurer wants to change rates, whether to lower or raise them, it must submit a detailed application to the Department of Insurance. This process can take months, sometimes more than six, seven, eight months, sometimes years. Recently, I believe I heard and was reading that the average wait time for any type of a rate change from the insurance industry was over 280 days. So imagine you're trying to deal with things as they're happening and you have to wait 200, 80, 300 days before you can make a change. It's going to make staying competitive difficult. So during this time, insurers are facing significant uncertainty. They're finding it difficult to respond to the rapidly changing market conditions, such as the increase in wildfire activity, changes to the cost of building materials, due to inflation, on, on, on. You've heard this stuff before. This ripple effect of the old regulations that have been felt throughout California is now reached and I would say has tipped over. Over the past few years, we've seen a growing trend of non-renewals in higher than average fire risk areas. According to recent data, more than 350,000 homeowners in California have received non-renewal notices from their insurance companies between 2015 and 2020. This represents a significant portion of the state's insurance market and highlights an increasingly difficult position that residents are finding themselves in when they are in higher than average fire risk areas. But the issues stemming from Prop 103 go even further back. One of the most contentious aspects of the proposition has been its impact on the competitive landscape on the insurance market. So, since the proposition's passage, several insurers have either reduced their presence in California or have left the state entirely. In 1988, there were over 100 companies writing insurance policies in California. Now, officially, that's down to closer to 70, with several of the larger carriers significantly reducing the number of policies they're right every year. For example, companies like State Farm, Allstate, and Farmers who were once dominant players in the California marketplace have either stopped writing new policies or severely restrict the number of new policies they write in high-risk areas. State Farm, who is the largest homeowners insurance provider in California, has significantly curtailed its operations in the state, citing the increasing risks and regulatory hurdles as the primary reason. Allstate, another major player, has limited its new policies to just a few thousand per month and more recently stopped writing altogether, further reducing competition and leaving consumers with fewer choices. Farmers has a limited appetite. My understanding anecdotally is it's hit or miss. You might get a quote, but it's unlikely, especially if it's not in the middle of the city. This reduction in competition has had a direct impact on consumers, with fewer insurers in the market, less incentive for companies to compete on price or to offer innovative products and discounts. This has led to higher premiums, fewer options for homeowners, particularly in higher, fire or risk areas. The lack of competition has also made it more difficult for new entrants to get into the market, right? New carriers can't find a way to get in 'cause they have all of these hurdles to undertake and because of these outdated guidelines that prevent them from actually underwriting risk. Okay, the current insurance crisis we find ourselves in today is the result of several factors, including the unintended I would like to say and think unintended consequences of proposition 103, the escalating risks associated with climate change and the increased cost of insurance operations and underwriting. Over the past decade, California has experienced an unprecedented series of natural disasters, most notably wildfires, but we've had other things too, and they have pushed the insurance market over the edge. To truly grasp of the crisis, get an idea of the numbers. Between 2012 and 2021, the direct incurred loss ratio for the insurance market was 73%. What does this mean? For every dollar that an insurance company collected, they were paying out 74 cents in claims. Just to put that in perspective, the national average was about 59 cents. Now, if you wanna jump forward, you're looking at a situation where insurance carriers are in a negative place, meaning they're paying $1.13, $1.15, sometimes a $1.20 for every dollar that they collect. Not sustainable, obviously, right? You can't keep paying out more money than you're getting and expect to stay in business. Remember, insurance carriers are for profit, right? They're not government entities, they're not entitlements. So if they can't make a profit, let alone lose money, they're not going to be around for long. So these numbers paint a troubling picture, but the reality is even more concerning because wildfire season in California has not even begun yet. We're also looking at over 9,000 fires that have burned over 1.2 million acres, $18 billion in losses. The following year, we're looking at 2018, the campfire by itself was $16.5 billion in paid claims. Mind you, this wipes out profits that any insurance company had for a decade. So this anecdotal idea that, well, they have made all this money over the long term. Yes, and then one of those wildfires eliminates all of the profit that they had for the last 10 years. Throw another fire in and they become behind the eight ball. Let's take another break and we'll continue talking about this. Want to make sure everyone has a clear picture of why we are, where we are, and where we're going to go from here. This is Insurance Hour and I am your host, Carl Sussman, we will be back in a flash. (upbeat music) - Ladies and gentlemen, boys and girls, in just a few moments, the window to the magic podcast show will begin. - My name is Patrick, my name is Calvin. - I'm Mouse Couture Gray, my name is Paul and I will be your guide through the wonderful world of Disney sound experiences. This show is a weekly trip into the world of the Disney theme parks and resorts. And this is the place where you get to use your ears to surround yourself with the magic. - For your safety, please remain seated while listening to the window to the magic.com podcast. - Maybe there's a name for this, something like "Diznautic" of a session. - Surround me, so we go happy. - Please visit windowtothemagic.com for more information or you can find us on Apple podcasts and in the iHeart Media app. (upbeat music) - Hello, hello, welcome back. This is insurance hour. I am your host, Carl Sussman. Thank you so much for being here. Phone lines are open, 559-650-317. Call or text that number. Send your questions in to questions@insurancehour.com. If you wanna get on our update text list, you can send us a text to 567-4-Carl. It's 567-367-5275. It's at his Carl with a K. That's why it's a 367 number. Okay, we were talking about proposition 103. We were talking about the California insurance crisis. And of course, when you hear about it, what do you think about wildfire? But wildfires aren't the only natural disaster that are putting a strain on the insurance marketplace in California. California is also prone to other catastrophic events like earthquakes, floods and storms and each of those had also contributed to the market that we're seeing right now. Take earthquakes. In 2019, there are RidgeQuest earthquakes, which included a 7.1 magnitude quake caused over a billion dollars in damages. Now, while this disaster did not have the same widespread impact as wildfires, it nonetheless added to that cumulative strain on the insurance market. Remember, if you're an actuary, if you're a guy watching the money, here's yet something else that's taking a big chunk of money away. Earthquakes present a unique challenge for insurers because they can cause a massive amount of damage in an extremely short period of time. Believe it or not, floods are another significant risk here in California. Although they may not grab the headlines as frequently as wildfires or even earthquakes, floods have caused billions of dollars in damage over the years. For example, in 2017, Northern Cal resulted in a billion dollars in flood losses, just in 2017. These floods not only damaged homes and businesses but also caused extensive damage to infrastructure adding to the overall impact. Then we also have storms often referred to as atmospheric rivers. I love that phrase, atmospheric rivers that have been hitting the state. These are intense storms. Owning a rental property sounds like a dream until you realize how much work goes into getting it ready. Determine a competitive rent price, market the property, schedule the showing screen, turn it off at the lease at a rent collection, handling its request, maintain the communication. Whew, sound complicated? Renner's warehouse is here to take the hard work off your rental to-do list. Qualify tenants, check, rent collection, check. Maintenance coordination, you got it. Go to Rennerswearhouse.com for a free rental analysis to find out how much your home can rent for. Or call 303-974-9444. Because from now on, the only thing you need on your to-do list is to call Renner's warehouse. - I'm Victoria Cash. Thanks for calling the Lucky Land Hotline. If you feel like you do the same thing every day, press one. If you're ready to have some serious fun for the chance to redeem some serious prizes, press two. - We heard you loud and clear. So go to luckylandslots.com right now and play over a hundred social casino-style games for free. Get lucky today at luckylandslots.com. - No purchase necessary. VGW Group, void rep prohibited by law. 18 plus, terms of condition supply. - Things that can bring heavy rainfall leading to flooding, mudslides, widespread property damage, and you name it. January 2023, storms, for example, cost over a billion dollars in losses across the state. These storms are becoming more frequent and more severe due to climate change, further increasing the risk and exposure for insurance companies. As if these challenges aren't enough, insurers are also grappling with rising reinsurance costs. What is that? - Reinsurance is essentially insurance for insurance companies. It allows insurers to spread their risk by purchasing coverage from other insurance companies to protect themselves against significant losses. However, as the frequency and the severity of natural disasters have increased, so have the costs of reinsurance. Reinsurance premiums have driven sharply in the recent years, making it more expensive for insurers to protect themselves against large-scale losses. Also keep in mind, Proposition 103 does not currently permit the industry to take the larger increases of costs in reinsurance into play when they're dealing with filing rates. So what that's doing is it's either allowing the insurance industry to go without reinsurance, which is bad, right? We like to spread the risk. Let's not put it with one place, or just have to eat that cost, the cost that they're already losing money on. So this increase in the reinsurance cost is critical because it directly impacts the ability of insurers to operate in high-risk areas in California. So without affordable reinsurance, many insurers simply can't afford to stay in the market again, especially when they're already facing significant losses. This has led to a vicious cycle where increasing risk leads to higher costs, which in turn leads to fewer insurers, which will operate in the state, which leads to higher costs again with lower competition. The growing risks and costs have also led to a significant increase in the number of non-renewals across the state. We've talked about this earlier, between 2015 and 2020, more than 350,000 policies had been non-renewed. And with the marketplace the way it is, where are they going? Where are they going? Well, I'll tell you one place that they're going. They're going to the California Fair Plan. Let's talk about the California Fair Plan a little bit. Given the challenges we've discussed, it's no surprise that many Californians have found themselves relying on the California Fair Plan for their insurance needs. The Fair Plan was established in 1968 as a safety net, as a last resort option for those who could not find coverage on the open market. However, in recent years the role of the Fair Plan has expanded far beyond what it was originally intended for, and this expansion has created significant problems for both consumers and the insurance market as a whole. So let's start with the basics of Fair Plan, but it's supposed to be the Fair Plan was designed to provide basic property insurance coverage to those who could not find it elsewhere, specifically in high risk areas that were prone to wildfires. The idea was that the Fair Plan would be there for those who had no other options. It would offer basic minimal coverage to protect against the most basic risks, fire. However, it was never intended to be a primary source of insurance for a large number of Californians. Unfortunately, that's exactly what it's become. Today the Fair Plan covers about 3% of California's insurance market, but this percentage is growing quickly. In many parts of the state, particularly in wildfire prone areas, the California Fair Plan has become the only option for homeowners and businesses. This shift has created a real strain on Fair Plan. First and foremost, the coverage offered by Fair Plan is limited. It's designed only to cover the basics, which means that for many policy holders, they're not getting coverage at all for what they're expecting or what they need. For example, they typically do not cover liability or theft. It has lower limits on coverage for rebuilding if there's a disaster. There are caps. This leaves homeowners or businesses vulnerable. Remember, it wasn't designed to be the place where you go to get coverage. It was where you go when you literally could not get coverage elsewhere. The California Department of Insurance has responded to this and has increased coverage options that are with the California Fair Plan, which is helping consumers in the short term, but also, guess what, putting more exposure on the Fair Plan, more exposure on an organization that was designed to be small, that was designed to be there as a last resort, not the only resort. You can see where we're going with this. The growing reliance on the Fair Plan is also a broader implication of the insurance market. As more consumers were forced to get coverage there, they have less of an incentive to have carriers in the private market compete in those areas. Well, they're already with the Fair Plan, so why should the carriers try and take on the higher risk? Why should they try and innovate to try and create coverage in an area that is a higher risk for fire if the Fair Plan's already taking it? Side note, the insurance carriers are the ones paying the bills for Fair Plan losses. It's pretty crazy. Let's take another quick break, and we will continue our conversation about the California Fair Plan. We'll continue our conversation about where we are, with what is happening in the insurance marketplace in California. It is challenging right now, and there are new regulations that are coming up. The California Department of Assurance has the Sustainable Insurance Strategy Roadmap that is being rolled out, hearings are happening, guidelines are happening, so with all the doom and gloom, at least I can tell you that people are taking action to try and make things better. Let's take another quick break. When we come back, we're going to get involved in a little more detail about where we are today and where we are going tomorrow. This is Insurance Hour, and I'm your host, Carl Sussman. Do you need homeowners insurance? Has your previous insurance company left the state? Non-renewed your policy? Or maybe they just raise your premium to an amount that you simply can't afford? Whatever the situation, we can help. Just dial #250 on your cell phone and say keyword insurance quote, and we will connect you with an agent who can assist you right away. Or if you prefer, you can visit us online at insurancehour.com/quotes. Whether you're looking for homeowners insurance or auto insurance, we'll send the best options straight to you. So what are you waiting for? Simply dial #250 and say keyword insurance quote, and we will connect you with a live agent to help provide competitive quotes for your homeowners insurance or auto insurance. Don't get caught unprepared. Ensure what matters with an insurance company you can trust and with a premium that you can afford. Don't put off until tomorrow what you should have done yesterday. Simply dial #250 on your cell phone and say keyword insurance quote. Hello, hello, welcome back. This is insurance hour. I am your host, Carl Sussman. Thank you so much for being here. We are talking about, preposis motor three, the California Fair Plan, the insurance crisis in California. Join the conversation. 559-6503-17. You can call our text. You want us an email, go for it at questions@insurancehour.com. We also have a text group if you want to keep up to date with time sensitive issues that are happening. Go ahead and sue us a text at 5674-Carle. That's 567-367-5275. Now, we've talked about proposition 103. We've talked about some of the things that it created in California. We have to talk about one aspect of it. Another aspect of prop 103 that does spark considerable debate is the role of advocacy groups, air quotes, which play a significant role in the passage of proposition 103. One in particular has often claimed that proposition 103 has saved California billions of dollars in insurance premiums. But there's really no way to know that because we don't have a parallel universe to go to where we can see what would have happened in California in the event that proposition 103 wasn't passed. We don't know how it would have changed drivers behaviors. We don't know how it would have changed insurance companies, ability to do business and compete and to innovate. So when we're hearing about proposition 103 and the intervention process, it's important that we understand that we don't have hard facts. We can only estimate, we can really only guess if you really want to be technical about it because we have no way of actually knowing what would have happened without it. Now, I'm not saying that there should be no protections for consumers or that insurance carriers should be running unchecked far from it. All I'm saying is that under proposition 103, here we are, that this is what it's gotten us. So we need to be real about this. We need to realize that proposition 103 is one of the primary reasons we are where we are. And this is not debated. This is what the insurance industry at large says. This is even what the air quote consumer groups are saying. This is why we're here. The difference is where do we go from here? And we need to talk a little bit about that. And we're gonna talk about where we're going from here according to the California Department of Insurance. Given the challenges we've discussed, it's clear something has to change, right? We can't stay where we are now. This is where the Sustainable Insurance Strategy introduced by California Insurance Commissioner Ricardo Laura comes into play. The Sustainable Insurance Strategy is a comprehensive plan designed to address the challenges facing the state's insurance market to ensure that all Californians have access to reliable, affordable insurance coverage. One of the key goals of the Sustainable Insurance Strategy is to increase availability for consumers in higher than average risk areas. Under this plan, insurance companies are required to commit to writing a minimum of 85% of their statewide market share in areas that have been identified as wildfire distressed or just distressed in general. These areas are areas that insurance companies will need to provide coverage to for California consumers where they previously were not. So the carriers are going to be forced to write in higher risk areas that they did not before. This is a crucial development because it helps ensure more Californians will have access to private insurance policies through private insurance companies rather than depending on the California Fair Plan. By requiring California companies to maintain a presence in these higher risk areas, their Sustainable Insurance Strategy aims to provide consumers with more options and better coverage at more competitive prices, right? That's what private industry does. It competes lower prices. Another important aspect of the Sustainable Insurance Strategy is its focus on modernizing how risks are assessed and priced. As I mentioned earlier, one of the limitations of Proposition 103 was that it required insurers to base their rates on historical data. This approach doesn't always reflect the true risk that a property faces, especially as climate change makes some natural disasters more frequent and more severe. Owning a rental property sounds like a dream until you realize how much work goes into getting it ready. Determine a competitive rent price, market the property, schedule the showing screen, turn it off at the lease at a rent collection, handle maintenance request, maintain communication. 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So the Sustainable Insurance Strategy addresses this issue by allowing insurance carriers to use forward-looking models in helping them assess risk. These models can take into effect things like climate change, real estate development in higher risk areas, the effectiveness of mitigation efforts such as fireproofing homes and creating defensible space. By incorporating these factors into their pricing, insurers can provide more accurate, more fair rates and compete with them, which should benefit the insurance industry and moreover, consumers. It's not just about improving the way risks are assessed, it's about encouraging and rewarding actions that reduce those risks. Under the Sustainable Insurance Strategy, homeowners of the businesses that take steps to mitigate wildfire risk will be eligible for discounts on their insurance premium. This creates a powerful incentive for property owners to invest in safety measures, which in turn helps to reduce the overall risk for everyone. We're going to have a bit of a shift from just charge less to if I do things to make myself a lower likely home owner to have a loss, not only am I going to get a discount from the carrier, that's mandatory, but there are going to be more carriers that want to write coverage for me. This strategy also includes significant reforms to the California Fair Plan. The plan's coverage limits are going to continue to be expanded, specifically on commercial properties, and there will be more availability for areas that truly do need to go with the California Fair Plan. Also, the Sustainable Insurance Strategy emphasizes transparency and public participation. The California Department of Insurance will continue to oversee the rate setting process, ensuring that it remains transparent, and accountable to the public. This includes making intervener filings more accessible, and encouraging broader participation in the rate setting process. Right now, the intervening process is basically monopolized by one entity, that one entity is basically existing based on that, as far as I can tell, and the Sustainable Insurance Strategy is going to try and curtail that by saying, "Look, the goal of the intervener process "was to have public discourse on rates and underwriting, "not to just create an industry and create a business "for one entity to get involved in to make money." Right? So, back to the roots, back to the spirit of what Proposition 103 was supposed to do, which was give consumers a voice to be able to be involved in rate making, and that's something that the Sustainable Insurance Strategy is not only going to maintain, they're going to encourage and broaden so that consumers have more of an ability to be involved in the process, and not have it just be left to one entity that has sort of become a de facto shadow Department of Insurance that nobody's really elected, nobody has any real control over. Go talk a little bit more about the Sustainable Insurance Strategy, what it's going to do, and as importantly, when it's going to do something after our next break, remember, phone lines are open, 559-656-0317, send your questions in to questions@insurancehour.com. This is Insurance Hour, and I'm Carl Sussman. We will be back in a flash. (upbeat music) - Ladies and gentlemen, boys and girls, in just a few moments, the window to the magic podcast show will begin. - My name is Patrick, my name is Calvin. - I'm Mouse Catier Gray, my name is Paul, and I will be your guide through the wonderful world of Disney sound experiences. This show is a weekly trip into the world of the Disney theme parks and resorts. And this is the place where you get to use your ears to surround yourself with the magic. - For your safety, please remain seated while listening to the window to the magic.com podcast. - Maybe there's a name for this, something like "Diznautic" obsession. (crowd cheering) - Please visit window to the magic.com for more information, or you can find us on Apple Podcasts and in the iHeart Media app. (upbeat music) - Hello, hello, this is Insurance Hour. I am your host, Carl Sussman. Thank you so much for learning here with me today. We are taking calls, as always, 559-6503-17, caller text. Send your questions in to questions@insurancehour.com. We've also created a text group in the event you want to be updated in real time with major changes that are happening in the California Insurance Marketplace. Just shoot us a text at 567-4, Carl. It's 567-367-5275. Yes, it's Carl with a K. We've had a lot of information in today's show. If you've missed any of it, jump online, search for insurance hour. You'll find us as a podcast. You'll find us on YouTube. You'll find us basically everywhere. Find this show. Lots of information here that you've missed if you have not been here since the beginning. Lots of information that you want to have. My goal is to try and keep you as informed a consumer as possible. And I always do the best I can to give you the most accurate up-to-date information, but I'm not perfect, right? I'm not perfect. And sometimes, if you hear something that doesn't seem right, please reach out to me and please let me know, and I will research that further. This isn't about ego. This is about correct information. I want to be sure that the information I'm providing is as accurate as possible. And if I miss the market time, I need you to tell me so I can go back, I can do the research, I can find out if there's been something that's been inaccurate. Furthermore, if you disagree with the opinion that I'm giving, by all means, let me know. We even see about having you on the show. Again, this isn't about me. This is about informing consumers, informing you what's going on, why it's going on, and as importantly, what you can do to be involved, all right? So keep that in mind. I'm not infallible. I can make mistakes, and I want you to tell me if you feel that I have so that I can correct it for everybody's sake. Now, going on, I want to highlight just some of the data that I've managed to dig up regarding the types of losses that the carriers have been seeing. And I'm not doing this to play the violin for the insurance industry. I'm doing it so we can have a better understanding of why they're not writing policies. For 2017, for example, in 2018, 2017 saw over 9,000 fires that burned over 1.2 million acres. That's over $18 billion in losses. So say goodbye to several decades of profit that the insurance industry has made. Money they made over the past, gone in a matter of one or two fires. The next year in 2018, the campfire caused 16 and a half, billion dollars, that's billion with a B in damages. And it is the largest natural disaster in the world that year. Those fires didn't just destroy homes and businesses. They also took lives, displaced thousands of people. The financial toll enormous and the impact on the insurance industry has been severe. Insurers have found it increasingly difficult to manage this level of risk. Again, if you're making money and then all of the money that you've made in the last 10 years, for example, is gone in one loss, how do you recoup from that? What happens if it happens the next year? And it did. What happens when it happens three or four years later? This is simply math, guys. This is not an issue of being on the insurance company's side. This is not an issue of towing the line. This is not political at all. This is literally just an issue of if a company has to be able to stay afloat and make a profit, there has to be a way for them to be able to do that. We don't have free money in this country, right? We don't have the ability to have our homes insured for free. We don't have the ability to have a state agency just protect our home without having to pay premium. Remember, the California Fair Plan exists. It is not an OT, funded by our tax dollars. It is not an OT, paid for or run by the state of California. It is an organization that is run and paid for by the admitted insurance carriers in California, okay? These are the carriers that already are struggling. These are the carriers that are already having problems in writing insurance policies in California because of the risk that exists. So the Fair Plan is growing. It's growing and growing and growing. And at the same time, the claims for the Fair Plan are being paid for by the very companies that are claiming they don't have the ability right now to pay the claims. Can you see a little bit of a problem that might be stacking up here to happen? So keep in mind, the California Fair Plan is there, but it's there as a safety net. It's not there, it's not designed to be there for everyone to just buy their coverage there and then assume that, eh, this is good enough. Keep in mind again, Fair Plan is not homeowners insurance, okay? Fair Plan equals sign slash not homeowners insurance. The California Fair Plan is fire insurance only. There is not coverage for water damage, right? Your pipe breaks, your sink overflows, your toilet valve cracks when you're on vacation. And why does that always happen? Why do those types of things happen always when there's nobody at home? Those things are not covered on the California Fair Plan. If somebody is suing you, if you have some type of personal liability loss, the California Fair Plan is not going to trigger coverage. They do not offer coverage for liability. Again, you're paying so much more for coverage and you're assuming sometimes you must be getting everything, right? If you were paying X dollars for a homeowners policy with an insurance company and you're paying double that with the California Fair Plan, surely you're going to be getting the same coverage or more, right? Wrong. Remember, the Fair Plan is there as a last resort and it's priced for people that are unable to obtain insurance elsewhere. Ergo, it's not priced competitively. It's not designed to be. If you're an entity that's writing in the highest risk areas, if you're an entity that's writing in areas that no other private carrier can make a profit in, do you think the price is going to be low or is it going to be high? It's probably going to be high. That's what it's designed for, right? That's what the Fair Plan is there for. That's what it's designed for. Now listen, we've talked about how we got here. We got here because of a combination of old regulations and a changing environment that insurance carriers have to deal with. California's not the only state that's dealing with these issues. California is just because we're so large and the world is jealous of us. That's face it because we're the best. We see these things. Owning a rental property sounds like a dream until you realize how much work goes into getting it ready. Determinate competitive rent price, market the property, schedule the showing screen, tenants, draft the lease at a rent collection, handle maintenance request, maintain communication. Whew, sound complicated? Renters' warehouse is here to take the hard work off your rental to-do list. Qualify tenants, check. Rent collection, check. Maintenance coordination, you got it. Go to runnerswarehouse.com for a free rental analysis to find out how much your home can rent for. Or call 303-974-9444 because from now on, the only thing you need on your to-do list is to call runners' warehouse. Hey, it's Ryan Seacrest. Life comes at you fast, which is why it's important to find some time to relax a little U-time. Enter Chumba Casino. With no download required, you can jump on any time, anywhere for the chance to redeem some serious prizes. So treat yourself with Chumba Casino and play over 100 online casino-style games all for free. Go to ChumbaCasino.com to collect your free welcome bonus. Sponsored by Chumba Casino. No purchase necessary. VGW Group. Avoid where prohibited by law, 18 plus terms and conditions apply. Larger than everyone else, right? Because we are so big because we have so much premium and so many people, we're going to see these problems magnified. Now in our final segment, I'm going to talk about where we are going and when we are going to see some relief from all of these things that are happening because it is going to get better. I know it doesn't feel like it after everything you've heard from me today. And it doesn't feel like it when you're getting your bill from the insurance carrier and your rates gone up or you're getting a non-renewal notice. But I promise you, with the sustainable insurance strategy and what I am hearing from both carriers, the Department of Insurance, even the consumer groups that are willing to say it on their record or off are optimistic that things are going to get better. Let's take our final break. When we come back, I'm going to tell you what is coming next, when to expect it, and as importantly or more, what you can do to be sure that you are ready for the changes that are coming. This is Insurance Hour, and I am Carl Sussman, back in a flash. [MUSIC PLAYING] Are you feeling lost in the search for the right insurance, making call after call, only to find no one willing to go that extra mile for you? At Sussman Insurance Agency, we understand that frustration, and we're here to change your experience. Where other sea obstacles, we see opportunities. While many might shy away from jumping through hoops. At Sussman Insurance Agency, we are prepared to leave, looking under every rock, exploring every avenue. That's not just what we do. It's who we are. Our dedicated team doesn't just offer policies. We provide solutions, solutions born for persistence, expertise, and a genuine commitment to finding you the best coverage possible. We don't just meet expectations. We surpass them. If you're tired of hearing no, or it's not possible, it's time to turn to a team that believes in yes, and let's make it happen. Don't settle for less. Reach out to Sussman Insurance Agency at 877-411-5200. Visit us online at sussmaninsurance.com, or email sales@sussmaninsurance.com. Let's uncover the insurance solutions you deserve. Sussman Insurance Agency, going the extra mile every time. (upbeat music) - Hello, hello everybody. Thank you for sticking it out with me today. I am Carl Sussman, and you are learning from insurance hour. Phone lines are open still 559-6503-17 color text. You wanna get on our text group. You can send a text to 567-4 Carl. That's 567-367-5275. Of course, good old email. Questions@insurancehour.com works as well. This has been a full, full show with a ton of information. And if you've missed any of it, jump online. Search for insurance hour. Search on Apple Podcasts. Search on YouTube. Just search for insurance hour. You'll find this, find this show. A lot of important information is here. All right? Now, I've talked a lot about what's happened in California, why it's happened, and where we are right now. Fortunately, fortunately, and I would not have been able to say this, you know, a year ago perhaps. There is change coming. Ricardo Lara and the Sustainable Insurance Strategy coming from the Department of Insurance are opposed to solve the crisis, or at least significantly improve where we are right now. While no regulations are perfect, certainly not at the get-go, there has been feedback from all parties involved that utilizing guidelines that are going to be coming from the Sustainable Insurance Strategy will actually assist the California insurance marketplace, get it going again. Now, when is this going to happen? It's actually happening now. It's already in the process of happening. Guidelines are being rolled out, and they're going to be continued to be rolled out through the end of 2024. Now, what that means is that by the end of the year, the Department of Insurance claims that all of these new guidelines will be rolled out. All of the insurance carriers can then turn around and start trying to work within those new guidelines and try and start working. That translates into the best I can tell. We're going to start to see, hopefully, some markets opening up in the first quarter. Even as early as January or February. So, if you've received a nominal notice, as I always say, don't wait, shop now. And at the same time, be aware that come the first of the year, we should be able to see some more markets opening up that were not there before. Now, what does this mean? Of course, I'm cynical. Does this mean that we're all just going to have to pay for higher premiums? Well, here's the reality. I hate to say it. Someone's got to tell you, might as well be me. Things cost more money. I go order a sandwich at the local sandwich shop and it's $20. When did that happen? I'll order something on Postmates. Forget adding all the fees up. That's a whole other issue. It's $30. Go out to dinner with myself and one other. It could be $50, $60, $70 just to have dinner. Things are expensive, right? Everybody knows that. Things are really expensive. We're not going to be able to be in a situation where things cost what they did five years ago. We're not living in a five year ago time. Inflation has done what it's going to do and while getting lower as far as continuing to increase, it still exists. Things do cost more money today than they did years ago and they cost significantly more in the environment that we're in right now. You add that to the fact that there are historical losses that are happening in the insurance industry and you add to that the fact that the insurance carrier's situation is dire, meaning that there are fewer and fewer carriers that are even in existence to be able to offer coverage, which means less competition. The carriers that are left are going to have to innovate. They're going to have to price their product and they're going to have to underwrite in such a way that they can be there to pay the claim. Remember, it doesn't do anybody any good to have an insurance company with a really inexpensive policy when there's no chance they can afford to pay if there's ever a claim, right? So yes, we are going to be paying higher insurance premiums than we did five years ago. Sorry, it sucks. It really, really sucks. Listen, every single day I speak to consumers, I speak to our clients and they tell me, my God, the price will not begin. The price will not begin. The price will not begin. I know it's a painful conversation and I can't fix that because things cost more money. Right now, the best thing that we can continue working toward is creating an environment in California where more insurance companies will enter the market, where more insurance carriers will be innovative, will offer discounts to people that are in higher fire risk areas to be able to get discounts to lower their premium, even though they are in an area that is a lot higher risk than it used to be. Certainly a lot higher risk than some of their neighbors that might be down the mountain or nowhere near that cliff, right? We're not going to be in a situation where premiums are going to be as similar as they used to be between someone that lives in the middle of the city where there isn't a tree in sight, well, one that wasn't planted at least, versus someone that lives way up on a mountain top. Those prices did not used to be as dramatically different as you would think. We're going to start to see prices based on the reality that exists today. And that means people that are in higher fire risk areas are going to pay higher premiums. And people that are in lower fire risk areas are going to pay less than those in those higher risk areas, but they're still going to be paying more than they were five years ago. Things cost more money. And hopefully, with the new guidelines that are coming out, with the insurance industry's ability to start utilizing predictive models to see what's going to happen, and as more data comes in, remember, this is all about data. This is all about math. When the insurance industry is able to predict more appropriately and properly and more accurately, where losses are going to happen, what those losses are going to look like, how big they're going to be, they can start pricing accordingly. We will see competition engage again. We will see carriers competing for your business. Remember, you used to be able to call an agent or broker and say, I want to get a quote, and they would give you three or four or five or six or a dozen options, and you would discuss what's best for you. Those days will come again. We will get to a place, shortly, I hope, where you'll be able to have choice of coverage between insurance companies. Where you're going to be in a position where you can talk to your agent or broker and tell them what you need, they'll be able to go to the market, find that coverage, explain it to you, and if it meets your requirements, be able to obtain it on your behalf. We don't have that now, but we have changes coming that should bring that back to California. And remember, California is not the only place that is seen this. We're here, we're seeing it, we're feeling it, and it's talked about because we're California. Other states are having the same problem. Some of them worse than California is, we just don't hear about it. California is the first to really be hit head on with all of these problems, and guess what? We're also going to be the first ones to solve that problem because California is always good when it comes to trying to find solutions to problems. We are too big, I hate to use the old saying, to not find a solution. We're too big to not be an inviting environment for industry to work in, to be here. There's too much potential in California for industry to not find a way to be able to offer coverage and to compete. And with the sustainable insurance strategy, with the newer guidelines and the new regulations that are coming down, we're going to be in a much better position to be able to let the carriers do what it is that they do. Right? Insurance policies. With that, I will close. I appreciate all of you being here. I appreciate all of you spending time. Make sure if you've missed any of the show, search for Insurance Hour, find it, listen to it, watch it, we're everywhere, and reach out if you have any questions. I am Carl Sussman, and you have been learning from Insurance Hour. I do want to thank all of you for taking the time to listen today. I know insurance is not necessarily the most sexy concept. It's not the most exciting thing in the world. It is important that you understand what it is you're getting, what you should be looking for, red flags, you name it, you just need to know more than you're used to. Things are more complicated than they used to be. If you have any questions, please reach out to me directly. You can email your questions to questions@insurancehour.com or call and leave a voicemail at 559-656-0317. Educating and entertaining Californians, one insurance policy at a time, this is Insurance Hour. The show is dedicated to Shamrock-Papa. E-digits, lock 'em in for more information, recreation, and guaranteed fun. KCAA 1050 AM. (whooshing) Owning a rental property sounds like a dream until you realize how much work goes into getting it ready. Determine a competitive rent price, market the property, schedule the showing screen, tenants, draft the lease at a rent collection, handle maintenance request, maintain communication. Whew, sound complicated? Renters' warehouse is here to take the hard work off your rental to-do list. Qualify tenants, check, rent collection, check. Maintenance coordination, you got it. Go to runnerswarehouse.com for a free rental analysis to find out how much your home can rent for. Or call 303-974-9444, because from now on, the only thing you need on your to-do list is to call runnerswarehouse. I'm Victoria Cash. Thanks for calling the Lucky Land Hotline. If you feel like you do the same thing every day, press one. If you're ready to have some serious fun, for the chance to redeem some serious prizes, press two. We heard you loud and clear, so go to luckylandslots.com right now and play over a hundred social casino-style games for free. Get lucky today at luckylandslots.com. No purchase necessary. VGW Group, void rep prohibited by law. 18 plus, terms of condition supply. [ Sound Effects ] And now, the voices of KCAA was an exciting announcement. Want to hear NBC News or KCAA anywhere you go? Well, now there's a nap for that. KCAA is celebrating 25 years in our Silver Anniversary with a brand new app. The new KCAA app is now available on your smart device, cell phone, in your car, or any place. Just search KCAA on Google Play or in the Apple Store. One touch and you can listen on your car radio, Bluetooth device, Android Auto, or Apple CarPlay. Catch the KCAA buzz in your earbuds or on the streets, celebrating 25 years of top news and excellence with our new KCAA app. Just do it and download it, KCAA, celebrating 25 years. [ Cheers and applause ] [ Music ] NBC News on KCAA Loma Linda, sponsored by Teamsters Local 1932, protecting the future of working families, Teamsters1932.org. [ Music ] NBC News Radio, I'm Tammy Trujillo. Arlington National Cemetery confirms a photography-related incident happened during a visit by former President Trump on Monday. Reports indicate there was a physical altercation between Trump staffers and a cemetery official who tried to prevent filming in photography in an area where recently killed soldiers are buried. In a statement, the cemetery said federal law prohibits political campaign or election-related activities within Army National Military Cemeteries and added that it shared the law with Trump's team. Even though he's ended his presidential campaign and thrown his support behind Trump, Robert F. Kennedy Jr. is still trying to get on the New York ballot in November. Andrew Whitman reports. Kennedy's lawyer, Wednesday, asked a state appeals court to restore his place on the ballot. Last month, a judge rejected Kennedy's listed home address on nominating petitions. He had listed the Westchester home of a friend, the judge determined R.F.K. Jr. lived in Los Angeles with wife actress Cheryl Hines. A decision is expected soon. A separate challenge claims a contractor for Kennedy on Long Island used deceptive tactics to get signatures for the campaign. Andrew Whitman, NBC News Radio New York. The CDC says six more people have died from an outbreak of contaminated deli meat. Since May, nine people have died and nearly 60 have been hospitalized by a listeria outbreak as connected to Borshead Meats. Borshead expanded its deli meat recall in July to include an additional seven million pounds of ready-to-eat meats from its plant in Virginia. Yelp is filing an antitrust lawsuit against Google. Earlier this month, a federal judge ruled that Google violated US antitrust laws and had monopolized the search market. Now Yelp has filed a lawsuit alleging Google used that monopoly to dominate advertising markets and manipulate search results. In an online statement, Yelp called Google the largest information gatekeeper in existence, here listening to the latest from NBC News Radio. Located in the heart of San Bernardino, California, the Teamsters Local 1932 Training Center is designed to train workers for high demand, good paying jobs, and various industries throughout the Inland Empire. If you want a pathway to a high paying job and the respect that comes with a union contract, visit 1932trainingcenter.org to enroll today. That's 1932trainingcenter.org. This Labor Day weekend will be one of the busiest ever when it comes to travel. Park Mayfield reports. AAA reports domestic travel during the last holiday weekend of the summer could jump as much as 9% compared to last year. The organization says some families may choose to travel to closer destinations due to time constraints. Meanwhile, the TSA said it's getting ready for the busiest Labor Day travel period it's ever seen, with an expected 8 and 1/2% increase in passengers compared to 2023. Some of the top US destinations for Labor Day according to AAA include Anaheim, California, Las Vegas, Salt Lake City, and Orlando. I'm Mark Mayfield. A change of venue hearing is set for today for accused murderer Brian Coburger. He faces four counts of murder for the deaths of four University of Idaho students in 2022. His defense team is asking for a venue change due to concerns about the difficulty of impelling an impartial jury in the city where the killings took place. United's flight attendants are approving a strike across the country more from Lucinda Kay. United Airlines flight attendants have just voted to approve strike authorization across the country if they don't reach an agreement with the airline. For now, off duty flight attendants are marching on informational picket lines at several airports. The flight attendants want raises, job security, and retirement. In a statement, United says it'll continue to work toward an agreement and a strike is not imminent as it's a lengthy process. This is the first time in 20 years that flight attendants at United have approved strike authorization. I'm Lucinda Kay. Kroger is admitting to raising prices far higher than necessary to fight inflation, the company's top pricing executive testified that the company had raised its prices, especially when it came to milk and eggs. The testimony's part of a larger anti-trust lawsuit aimed at stopping Kroger from buying Albertsons. And there was no grand prize winner in Tuesday nights, make a millions drawing, so that already huge jackpot rolls over to Friday when it will be at least $627 million. Tammy Trujillo, NBC News, Radio. KCAA, where every day is a great day, KCAA, Loma Linda. - I wanna let you know time off the back, that's not why I'm here. I'm not here for your support. I'm here for the money. They paid me well, right? - Owning a rental property sounds like a dream until you realize how much work goes into getting it ready. 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