Gov., insurance commissioner announce new orders, regs for industry

As the state's insurance industry spirals out of control, leaders cut a deal to ensure companies will remain, or return to the state

Gov. Gavin Newsom issued an executive order on Sept. 21 to address the insurance crisis in the state. He, along with Insurance Commissioner Ricardo Lara, laid out plans to ensure companies will return to the state and write, or renew, policies, especially in high-risk areas. Courtesy photo

STATE — The insurance industry has been in a whirlwind the past several years due to a myriad of factors including COVID refunds, sector economics, wildfire threats and legislative roadblocks for setting rates, among other factors.

Gov. Gavin Newsom issued an executive order on Sept. 21 followed by an announcement minutes later from Insurance Commissioner Ricardo Lara declaring a “sustainable insurance strategy” to improve market conditions.

North County Pipeline detailed the state of the insurance industry in a two-part series on Sept. 2-3.

But now, Newsom’s order directs Lara to take “prompt regulatory action” to stabilize the wild market for homeowner’s and commercial property insurance. An independent industry source, who requested anonymity due to potential blowback from the state, said there appears to be some political theater as Newsom prepares to publicly debate Florida Republican Gov. Ron DeSantis on Nov. 30.

The DeSantis debate, the source said, would be an opportunity for Newsom to show California is attacking its insurance problem while Florida continues to spiral even worse than the Golden State.

Regardless of political theater, Newsom’s order calls for expanding coverage choices for consumers, especially in underserved areas; improving the speed, efficiency and transparency of the approval process for rate adjustments; tailoring the rate approval process to account for all factors; maintaining long-term availability of coverage; and maintaining solvency of the state’s FAIR Plan (Fair Access to Insurance Requirements), which is designed as a temporary safety net.