Political agreement on fire insurance goes down in flames

Last-minute talks between lawmakers in Sacramento and insurance companies have collapsed, with no deal to ensure homeowners can get coverage in areas prone to wildfires.

State Sen. Bill Dodd, D-Napa, said talks fizzled on an agreement aimed to prevent more insurance companies from leaving California by allowing them to increase rates in exchange for covering more homes in regions with a high risk of fires, the San Francisco Chronicle reported.

The failure to cut a deal before the Monday deadline for lawmakers to submit legislation this year comes during growing reports of Californians unable to secure quality coverage.

“Deal is dead,” Dodd declared in a text message while on the floor of the state senate. “Very frustrating!”

Over the past several months, big insurance companies that include Allstate, State Farm and Farmers have shrunk their coverage across the Golden State.

State Farm and Allstate say they’re not writing any new homeowner insurance policies in California because it’s too expensive to do business in the state. Last week, United Services Automobile Association Group said it would reduce future coverage, according to the Chronicle.

Homeowners are either losing their policies or unable to sign for new ones.

Many are forced to buy the state’s Fair Access to Insurance Requirements Plan, an insurer of last resort. The FAIR plan is generally more expensive and provides less coverage. 

Legislators, insurers and Insurance Commissioner Ricardo Lara had been holding confidential, closed-door talks to prevent an insurance crisis in California, which has the strongest insurance protections in the country.

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But consumer advocates said that legislation pushed through at the last minute, with scant time for oversight, would favor the insurance industry over Californians. They’d called it a back-room deal, and celebrated its collapse. 

“Deals hatched in the darkness often aren’t good deals,” Jamie Court, president of Consumer Watchdog in Santa Monica, told the Chronicle. “None of the consumer groups were at the table.” 

Dodd said he and his colleagues were ready to support it. He said Californians would have ended up paying more for property insurance, but in exchange more people would have access to quality plans in fire-prone areas.

— Dana Bartholomew