RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ANAHEIM REQUESTING THE STATE OF CALIFORNIA
TAKE EMERGENCY ACTION TO STRENGTHEN AND
STABILIZE CALIFORNIA’S MARKETPLACE FOR
PROPERTY INSURANCE
WHEREAS, in 1988, California voters enacted Proposition 103, establishing essential consumer protections aimed at maintaining fair and affordable insurance rates while ensuring a competitive marketplace; and
WHEREAS, last year, two of the state's largest insurance carriers, representing over 27 percent of California's admitted insurance market, announced their decision to cease issuing new homeowners and commercial property insurance policies; several other insurers, accounting for an additional 36 percent of the market, indicated plans to limit new policy issuance; and WHEREAS, the decrease in insurance options directly impacts consumer access to coverage, leaving homeowners and business owners statewide unable to secure new insurance policies from the admitted market; and
WHEREAS, the City of Anaheim has a unique disposition, with neighborhoods located near wildfire areas and are at risk of losing or obtaining insurance policies on their properties; and
WHEREAS, access to insurance is vital for homeowners to protect their most significant asset and enables homebuyers to obtain mortgages for properties that build generational wealth; a lack of insurance options can freeze real estate transactions and hinder new housing development, worsening the state’s critical housing shortage; and WHEREAS, Californians unable to secure coverage from the admitted market are compelled to apply for the California Fair Access to Insurance Requirements (FAIR) Plan, a state-established risk pool designed as a last resort, providing temporary coverage as consumers seek traditional insurance options; and
WHEREAS, the decline of the admitted-provider market has resulted in a steady increase in FAIR Plan enrollment over the past five years, jeopardizing the plan's stability and putting this safety net at risk; and
WHEREAS, policy decisions have exposed California's homes and businesses to catastrophic loss, which can only be mitigated by stabilizing the homeowners and commercial property insurance markets while ensuring fair and affordable rates, and maintaining the FAIR Plan’s viability for consumers whose policies are nonrenewed and for homebuyers needing insurance for mortgage approval; and
WHEREAS, while the California Insurance Commissioner has proposed draft regulations to address this urgent crisis, the Little Hoover Commission’s hearing on March 28, 2024, indicated that such reforms “will not go into effect until at least 2026,” with potential further delays due to legal challenges; and
WHEREAS, the California Insurance Commissioner possesses broad authority under the Insurance Code to adopt emergency regulations that promote public welfare, including under sections 1861.01, 1861.05, and 1861.055 for insurance rate change applications, as well as under section 11346.1 of the Government Code and section 12921.7 of the Insurance Code.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF ANAHEIM, as follows:
The Insurance Commissioner, State Legislature, and the Governor are urged to declare a state of emergency and to take immediate regulatory and legislative actions aimed at strengthening and stabilizing California’s marketplace for property insurance. The following objectives should guide their regulatory response:
1. Expand coverage options for all consumers, particularly in underserved areas of the state.
2. Enhance the efficiency, speed, and transparency of the California Department of Insurance’s rate approval process.
3. Adjust the rate approval process to consider all necessary factors for fostering a robust and competitive insurance marketplace, including potential revisions to the assessment of catastrophe risks, reinsurance costs, and other legitimate insurer expenses.
4. Ensure the long-term availability of homeowners and commercial property insurance coverage.
5. Safeguard the solvency of the FAIR Plan, promoting long-term resilience against extreme weather events, by identifying strategies to reduce its market share in underserved areas and facilitate the transition of its customers to the admitted insurance market. 3 THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Anaheim this ____ day of ______________, 2024 by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
CITY OF ANAHEIM
By: _________________________________
MAYOR OF THE CITY OF ANAHEIM
ATTEST:
_____________________________________
CITY CLERK OF THE CITY OF ANAHEIM