Insurance Industry Exploits California Wildfire Disaster To Promote Deregulation In Congress, Consumer Watchdog Says

(MENAFN- PR Newswire) "People's homes are in ruins and the insurance industry is trying to cash in on the wildfires for financial gain. Raising prices on consumers and eliminating insurance consumer protections won't keep the country insured," said Carmen Balber, executive director of Consumer Watchdog. "That's what they tried in Florida and insurance premiums are still 2 and a half times California's, three times as many Florida homeowners have been forced into the state insurer of last resort, and insurance companies still fled the state."

California's voter-approved insurance law, Proposition 103, requires insurance companies to open their books and justify rate increases before they take effect. The public can also participate in oversight to keep the insurance companies and regulators honest. The law has saved $154 billion dollars for drivers alone since 1988, according to the Consumer Federation of America .

Investments to make communities more disaster resilient, requiring insurance companies to recognize those efforts, moving the insurance industry out of the fossil fuel business, and strengthening state consumer protections are necessary to keep people insured across the country, said Consumer Watchdog.

The group released the following data points today in advance of the Thursday, 10:00 AM hearing of the U.S. House Judiciary Subcommittee on the Administrative State, Regulatory Reform and Antitrust:

• Insurance companies are not going broke in California. The home insurance industry was more profitable in California over the last two decades than it was nationwide, with an average return on net worth – a profit measure that includes the investment income where insurance companies make most of their money – three percentage points higher than the national average.
  
• California did even better in recent years, with return on net worth reaching 14.3% in 2022, compared to 0.7% on average nationally, and consistently lower loss ratios - 53.7% compared to 70.5% nationwide in 2022.
  
• Insurance companies have received repayments from California utility companies responsible for many of the state's worst fires. For example, PG&E repaid insurers $11 billion for its role in the 2017 and 2018 Northern California fires. Similar repayments will occur if Edison, as preliminary reports suggest, is found responsible for the Eaton Fire.
  
• Consumers have been paying for climate change in the form of higher rates and non-renewals across the state and the nation. As a result, the insurance industry nationally has a record $1.1 trillion in surplus . In California, nine of the ten top home insurance companies have received one or more double-digit rate increases totaling billions of dollars in the past two years.
  
• Consumer Watchdog has used California's insurance regulations to ensure those rate hikes were justified, and has prevented $6.5 billion in unjustified rates in the last two decades.
  
• Insurance companies in California invest over $500 billion in oil, gas and coal companies , exacerbating the damage from climate change-driven weather events. The industry also enables continued fossil fuel extraction, production and transportation by underwriting fossil fuel infrastructure , earning tens of billions in premiums from these projects annually.

SOURCE Consumer Watchdog

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