The following interview first appeared in the CAI San Diego Community Insider. You can view the Spring 2023 Edition here. 
- With fewer and fewer commercial insurance companies offering coverage for properties they deem to be too exposed to wildfires, what are the Department’s plans for ensuring a vibrant competitive marketplace for community associations that currently have such limited options?
Under my leadership the Department of Insurance has made wildfire safety a top priority. Our community associations are an essential part of that effort. I am working with the Governor’s Administration, the State Legislature, and other stakeholders to create and implement solutions to keep insurance available and affordable.
Together with CAL FIRE and other state emergency preparedness agencies, last year the Department released Safer from Wildfires, a first-of-its-kind insurance framework for homes, businesses, and communities. I introduced a new regulation that went into effect in October 2022, requiring insurance companies to use Safer from Wildfires in providing discounts for residential and commercial coverage, including HOAs. I appreciate the testimony from the Community Associations Institute of California in support of my regulation, which is the nation’s first wildfire safety regulation for insurance.
My regulation addresses complaints that I heard from many consumers and businesses across the state, that insurance companies are unwilling to account for steps taken to harden their properties and mitigate communities against wildfire. This made no sense to me, since wildfire safety should be a priority for all of us, including insurance companies. I have personally visited Homeowner Associations in wildfire-threatened areas of the state and staff in my Department have met with HOA members to obtain feedback on the issues they are facing with the goal of finding solutions. Insurance companies have until April 2023 to submit new rate filings for approval by my Department that include wildfire safety discounts. I look forward to giving you an update on our progress later this year.
- How can the CA FAIR Plan eligibility be broadened to help give community associations access to “last-resort” insurance? How can we get those changes implemented? What help do you need from the residents of condominiums to push through that change?
Last year, I expanded FAIR Plan commercial coverage limits to help address the needs of community associations and businesses, increasing the combined commercial coverage limits to nearly double their previous level, which had not been increased in nearly 25 years. I know there is more to be done to make the FAIR Plan an effective safety net when community associations need temporary coverage. That is why I also convened the first-ever investigatory hearing on July 13, 2022, into how the FAIR Plan can better serve both homeowners and commercial entities. Because the FAIR Plan is administered by insurance companies, CAI’s testimony at that hearing was vital to showing the need for further changes.
The FAIR Plan’s mission under law is to supplement – not to replace – the competitive admitted market, while providing insurance that meets the needs of residents and businesses. The FAIR Plan should serve as a bridge to a competitive marketplace and a temporary backstop for consumers.
My Department continues working with homeowners’ associations to determine potentially higher FAIR Plan commercial coverage limits because of their unique needs, including liability unrelated to wildfires.
- How do you suggest that we encourage carriers to be more transparent about why they choose to decline a community association risk and what can be done to have them qualify for coverage? What assistance can you offer the community associations (predominantly condominiums) that cannot get ANY property insurance?
My new Safer from Wildfire regulation –now law– does just that by requiring insurance companies disclose your wildfire risk score and the criteria behind it.
My regulation also creates a right of appeal if you’ve made safety upgrades under our new guidelines. California will be the first state to require insurance companies to provide wildfire risk scores to consumers, including both residents and businesses. I took this action after hearing from residents who had no idea how insurance companies rated their wildfire risk or what actions they could take to change that scoring.
Ongoing communication with my Department is critical to our ability to assist you. If you are having difficulty obtaining insurance, I urge your community association boards to contact my Department at 800-927-4357 or through our website, insurance.ca.gov, and to file a formal request for assistance. Under privacy rules, we need to hear from authorized representatives so we can look at the facts of your situation. Improving access to insurance remains one of the top priorities for me and my Department, and we look forward to continuing to work with CAI on this mission.
Commissioner Ricardo Lara previously served in the California Legislature, representing Assembly District 50 from 2010 to 2012 and Senate District 33 from 2012 to 2018. Commissioner Lara earned a BA in Journalism and Spanish with a minor in Chicano Studies from San Diego State University. http://www.insurance.ca.gov/0500-about-us/01-commissioner/
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Has your community association been hit by massive and un-budgeted insurance increases? You are not alone! The CAI-CLAC Insurance Task Force continues to meet with the Insurance Commissioner Ricardo Lara and the California Department of Insurance (“Department”) on issues impacting common interest developments (CIDs). Share your story below and make your voice heard. CLICK HERE.
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