RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PASADENA
REQUESTING THE GOVERNOR DECLARE A STATE OF EMERGENCY
RELATED TO THE PROPERTY INSURANCE MARKET, THE
GOVERNOR, INSURANCE COMMISSIONER, AND THE CALIFORNIA
STATE LEGISLATURE TAKE IMMEDIATE ACTION TO STRENGTHEN
AND STABILIZE CALIFORNIA'S RESIDENTIAL AND COMMERCIAL
PROPERTY INSURANCE MARKET, AND DIRECTING THE MAYOR TO
TRANSMIT A LETTER TO APPROPRIATE STATE OFFICIALS
REQUESTING THAT STEPS BE TAKEN TO STABILIZE THE PROPERTY
INSURANCE MARKET
WHEREAS, in 1988, California voters enacted Proposition 103, which established consumer protections to keep insurance rates fair and affordable and to ensure a competitive marketplace; and
WHEREAS, in 2023, two of the State's largest insurance carriers announced they would stop issuing new homeowners and commercial property insurance policies in California, and these carriers represented over 27 percent of the admitted insurance market in California, and several other insurance carriers, representing more than 36 percent of the market, announced plans to limit new policy origination; and WHEREAS, wildfires have continued to be a significant and growing concern throughout the State of California, which along with other local government agencies, non-profit organizations, and homeowners, have worked extensively to improve fire resistance and reduce wildfire risk; and
WHEREAS, despite these efforts, many residents and businesses have reported having their property insurance policies canceled or having significantly higher premiums imposed by their carriers, indicating that a reduction in insurance options is directly impacting consumer access; and
WHEREAS, the reduction of insurance options in the State has a direct negative effect on consumer and business access to coverage in all parts of the State, and homeowners, and small business owners are now unable to obtain new insurance policies from the admitted insurance market; and
WHEREAS, access to property insurance is essential to homeowners to protect what is for many their largest and most important asset, and is necessary for homebuyers to secure a mortgage for a home that can build generational wealth, but a scarcity of options may freeze real estate transactions and slow or stop the rate of new affordable housing, including accessory dwelling units and other affordable housing options, exacerbating the State's critical housing shortage and particularly impacting the most vulnerable, including young families and those on fixed incomes; and Meeting of: 10/28/24
Agenda Item No. 24
WHEREAS, those unable to obtain property insurance coverage in the commercial market must seek protection through the California Fair Access to Insurance Requirements (FAIR) Plan, a state-established risk pool intended to operate as California's insurer of last resort, providing temporary coverage as consumers pursue insurance in the traditional market; and
WHEREAS, over the past five years, the reduced availability of property insurance through the traditional commercial marketplace has resulted in steadily increasing enrollment in the FAIR Plan, threatening the ongoing stability of this state-established risk pool; and
WHEREAS, even those businesses and homeowners who are able to secure temporary insurance coverage through the FAIR Plan face premiums that are, in many cases, multiple times their previous rates and that are unaffordable to them, forcing them, in some cases, to sell their businesses or homes; and
WHEREAS, the California Insurance Commissioner recently drafted regulations to address the immediate crisis in the property insurance market, but it may take years for these regulations to impact the market, with this timeline potentially further delayed if legal challenges are taken against the regulations; and WHEREAS, the Governor has authority under California law to declare emergencies, and the California Insurance Commissioner has broad authority under the Insurance Code to adopt regulations to promote the public welfare, including regulations governing the prior approval process for insurance rate change applications, and to adopt emergency regulations under Section 11346.1 of the Government Code and Section 12921.7 of the Insurance Code; and
WHEREAS, the California Department of Insurance's mission is to protect all Californians by regulating the insurance industry to ensure a competitive and sustainable market, investigating fraud, and advocating for consumers through awareness, public policy, innovation, and service.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Pasadena requests that the Governor declare a state of emergency relating to the property insurance marketplace.
BE IT FURTHER RESOLVED that the City Council requests that the Insurance Commissioner and the State Legislature take immediate action to strengthen and stabilize California's property insurance market and that the Commissioner, Legislature, and Governor consider the following goals in Grafting an appropriate regulatory response:
1. Expand coverage choices for all consumers, particularly in underserved areas of the State.
2 2. Improve the efficiency, speed, and transparency of the California Department of Insurance's rate approval process.
3. Tailor the rate approval process to consider all factors necessary to promote a robust, competitive insurance marketplace, including through potential revisions to the way catastrophe risks, reinsurance costs, and other legitimate insurer costs are taken into account.
4. Maintain the long-term availability of homeowners and commercial property insurance coverage.
5. Maintain the solvency of the FAIR Plan to protect its policyholders and promote long- term resiliency in the face of extreme weather events, including by identifying mechanisms to reduce its share of the overall market in underserved areas and move its customers into the admitted insurance market.
BE IT FURTHER RESOLVED that the Mayor of the City of Pasadena is hereby authorized and directed to work with City staff and the City's State Legislative Advocates to draft and transmit a letter to appropriate State officials, requesting that steps be taken to stabilize the State's property insurance market.
Adopted at the regular meeting of the City Council on the 2024, by the following vote:
day of October,
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED AS TO FORM:
Michele Beal Bagneris
City Attorney/City Pre
Mark Jomsky
City Clerk, CMC
see
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