Home insurance issues are taking center stage in the fight for Feinstein’s Senate seat

U.S. Senate candidate Adam Schiff, center, is surrounded by attendees Tuesday during an appearance at a Santa Cruz County Democratic Party event at the home of George O and Jill Michaelis O in Santa Cruz. (Shmuel Thaler – Santa Cruz Sentinel)

California homeowners hurt by the collapse of the Golden State’s home insurance market will have a new place to air their frustration in 2024 — at the ballot box.

The troubling issue is emerging as a major focus in the heated race for the U.S. Senate, drawing hopes and fears — and perhaps money — from consumer groups, industry leaders and, soon, voters in distressed parts of the state.

Now, Rep. Adam Schiff, the front-runner in the March 5 primary, has introduced a bill in Congress aimed at alleviating home insurance woes across the country and especially in California, where officials struggle to stabilize the market in the wake of record wildfires. . Devastating winter storms in recent years have led insurers to cancel coverage, limit new policies and sharply increase premiums, especially in areas considered at risk of wildfires.

Insurers say California has not allowed its rates to keep up with its rising costs, including the costs of reinsurance — policies that insurers buy to limit their liability exposure to catastrophes.

The Burbank Democrat’s Incorporating National Support for Unprecedented Risks and Emergencies (INSURE) Act would create a federal reinsurance option, which supporters say would be less expensive because it would not have to turn a profit. The law would require participating insurers to offer homeowners coverage for all natural disasters, including wildfires, severe wind storms, hurricanes, floods and earthquakes.

“My insurance bill addresses the pressing crisis in the home insurance market, particularly in California, where the cost of insurance has skyrocketed and insurers have stopped writing new policies,” Schiff said. “Climate change has dramatically increased the risks of natural disasters, and insurance companies are shifting costs to consumers struggling to afford disaster coverage. My bill is a critical step forward in efforts to ensure homeowners and communities have affordable and accessible coverage.

Consumer groups support Schiff’s bill, H.R. 6944.

But insurance companies are opposed. Nate Winicki, senior vice president of federal government relations for the American Property Casualty Insurance Association, the main national trade association for home, auto and business insurers, said they appreciate Schiff’s efforts and are “still analyzing the legislation.”

But the various factors driving up insurance costs across the country “cannot be overcome by a broad federal program,” Winicki said. Although the bill’s supporters say its impact on taxpayers would be limited, Vinicke raised concerns that it could “put federal taxpayers at greater risk” than the National Flood Insurance Program, which the federal government created in 1968 to help residents and business owners High areas. High-risk areas receive flood insurance. That program, supported by the Federal Emergency Management Agency, now owes more than $20 billion.

Insurers complain that regulations tightened by California voters with 1988’s Proposition 103, written by Harvey Rosenfeld, founder of Consumer Watchdog, have made it too difficult for their rates to cover rising costs, prompting companies to limit coverage to avoid excessive exposure to losses. Catastrophic disasters. They have demanded faster action on rate hike requests, and that the state allow them to include computer catastrophe models and reinsurance costs as their basis.

Last fall, Gov. Gavin Newsom urged Insurance Commissioner Ricardo Lara to develop solutions along these lines, and Lara announced plans to do so by the end of this year that will include a commitment from insurers to provide at least 85% coverage in areas at risk for wildfires. . .

Without airtight coverage guarantees, Lara’s plan would just be a giveaway to insurance companies that would cost California homeowners, Rosenfeld said. Consumer advocates have opposed allowing insurers to bill California homeowners for reinsurance as other states do because it is purchased on what they say are unregulated and irregular global markets at costs that would raise premiums by hundreds of dollars per home.

Rosenfeld called Schiff’s bill a “smart approach” that would expand consumer protections from a variety of disasters that many policies now exclude.

“This would solve the industry’s problem — they claim they can’t provide insurance because reinsurance is too expensive — and force them to sell a policy that covers everyone’s needs,” Rosenfeld said. But he also acknowledged that any federal legislation in a divided Congress would take years before it could be enacted.

The bill escalates the home insurance crisis as an issue in California’s US Senate race, which Schiff has consistently led in fundraising and polling.

David McCowan, a political science professor at Sonoma State University, in the heart of Wine Country devastated by recent wildfires, sees this as a smart play by Schiff to rally support at the expense of his main Democratic Senate rival, the Orange County representative. Katie Porter, known for grilling CEOs at the whiteboard.

Porter and Schiff released their first TV ads this week. Porter says “Katie Porter’s whiteboard is one of the ways you often see senior executives questioning” and that she “focuses on your challenges” including “reducing housing costs.” Schiff touts a track record of “results,” arguing that “Californians deserve a senator who delivers for them every day, not just talks a good game.”

While the bill would not provide any insurance rate relief before the election, McCowan said it puts Schiff in the driver’s seat on an important issue statewide and across party lines while also pressuring his top Democratic rivals, Porter and Oakland Rep. Barbara Lee, to support his proposal. He also noted that it helps Schiff appeal to voters in wildfire-stricken areas of Northern California who are less familiar with him.

“This allows him to diminish the consumer persona that Katie Porter is cultivating,” McEwan said.