aimed at persuading insurers to continue doing business in the nation’s most populous state.
In 1988, California voters approved Proposition 103. It said insurance companies had to get permission from the state Department of Insurance before they could raise their rates. Insurance companies say that because they can’t consider climate change in their rates, it makes it difficult to truly price the risk for properties. They also complain that they are having to pay more for reinsurance, which they cannot recoup from ratepayers.
The number of people on the FAIR Plan has nearly doubled in recent years. Insurance companies are worried about this trend. If the fund were to go insolvent, insurance companies would have to cover the cost.California Insurance Commissioner Ricardo Lara said he will write new rules that would let insurers consider climate change when setting their rates. He has also pledged to consider rules that would let them consider some of their reinsurance costs.
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