HomeMy WebLinkAbout2024-045 CC Reso Request -Stabilize CA Marketplace Homeowner InsuranceRESOLUTION NO. 2024-045
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BALDWIN
PARK, CALIFORNIA, REQUESTING THE CALIFORNIA INSURANCE
COMMISSIONER, STATE LEGISLATURE, AND THE GOVERNOR
TAKE EMERGENCY ACTION TO STRENGTHEN AND STABILIZE
CALIFORNIA'S MARKETPLACE FOR HOMEOWNERS AND
COMMERCIAL PROPERTY INSURANCE
WHEREAS, In 1988, California voters enacted Proposition 103, which established a
robust set of consumer protections designed to keep insurance rates fair and affordable and to
ensure a competitive marketplace; and
WHEREAS, last year, two of the State's largest insurance carriers, representing over 27
percent of the admitted insurance market in California, announced they would stop issuing new
homeowners and commercial property insurance policies in California; several others,
representing more than another 36 percent of the market, announced plans to limit new policy
origination; and
WHEREAS, the reduction of insurance options in the State has a direct negative effect on
consumer access to coverage: in all parts of the State, homeowners, business owners are now
unable to obtain new insurance policies from the admitted insurance market; and
WHEREAS, access to insurance allows existing homeowners to protect what is for many
their largest and most important asset, but a scarcity of options may freeze real estate transactions
and slow or stop the rate of new housing development, including attached dwelling units like
affordable housing projects, exacerbating the State's critical housing shortage; and
WHEREAS, Californians who cannot obtain coverage from the admitted market are
forced to apply for 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, policy decisions have placed Californians' homes and businesses at risk of
catastrophic loss that can only be prevented by stabilizing the homeowners insurance and
commercial property insurance markets while providing rates that remain fair and affordable to
consumers, and maintaining the ongoing viability of the FAIR Plan, which provides a vital safety
net to Californians whose policies are nonrenewed and to homebuyers who cannot secure a
mortgage without insurance; and
WHEREAS, the California Insurance Commissioner has released draft regulations to
address this immediate crisis but the Little Hoover Commission hearing on March 28, 2024 reports
that reforms "will not go into effect until at least 2026, and it may take a few years after that for
the market to react ... this timeline, of course could be delayed further if lawsuits by an party,
including insurers or consumers, were to occur"; and
WHEREAS, on July 25, 2024, the California Insurance Commissioner entered into a
breakthrough agreement to modernize the FAIR Plan. Nonetheless, more urgent action is
necessary to stabilize the California insurance market and address the insurance crisis; and
WHEREAS, the California Insurance Commissioner has broad authority under the
Insurance Code to adopt emergency regulations to promote the public welfare, including under
sections 1861.01, 1861.05, and 1861.055, to adopt emergency regulations governing the prior
approval process for insurance rate change applications, and to adopt emergency regulations render•
section 11346.1 of Government Code and section 12921.7 of the Insurance Code.
NOW, THERE, FORE, THE CITY COUNCIL OF THE CITY OF BALDWIN PARK'
HEREBY RESOLVES AS FOLLOWS:
SECTION 1. The Insurance Commissioner, State Legislature, and the Governor are
requested to declare a state of emergency and take immediate emergency regulatory and legislative
action to strengthen and stabilize California's marketplace for homeowners insurance and
commercial property insurance. The Commissioner, Legislature, and Governor must consider the
following goals in crafting all appropriate regulatory response:
A. Expand coverage choices for all consumers, particularly in Underserved areas of the
State.
B. Improve the efficiency, speed, and transparency of the California Department of
Insurance's rate approval process.
C. Modify the rate approval process to account for 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
accounted for.
D. Maintain the long-term availability of homeowners and commercial property insurance
coverage.
E. Maintain the financial competence of the FAIR Plan to protect its policyholders and
promote long-term resiliency in the face of extrerne 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.
SECTION 2. That the City Clerk shall certify to the adoption of this Resolution and that
this Resolution shall go into effect irniliediately upon. approval.
APPROVED AND ADOPTED this October• 2,2024,
Emmanuel J. Estra
Mayor k&)
[ATTESTATION ON NEXTPAGE]
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES ss.
CITY OF BALD IN PARK
1, CHRISTOPHER SAE.NZ, City Clerk of the City of Baldwin Park, do hereby certify that
the foregoing Resolution 2024-045 was duly and regularly approved and adopted by the City
Council of the City of Baldwin Park at a regular inecting of the City Council held on September
18, 2024, by the following vote:
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ABSENT: N/A
Christopher Saenz, City Clerk