The San Bernardino County Board of Supervisors unanimously urged the state to declare a state of emergency and take immediate emergency regulatory and legislative action to strengthen and stabilize California’s marketplace for homeowners insurance and commercial property insurance as part of a resolution it adopted at its June 25 meeting.
“The reduction of insurance options in the state has had a direct negative impact on our consumers’ ability to get coverage and it’s putting our homeowners and businesses at risk of catastrophic loss,” said Board of Supervisors Chairman and Third District Supervisor Dawn Rowe.
In 1988, California voters enacted Proposition 103, which established a robust set of consumer protections designed to keep insurance rates fair and affordable and to ensure a competitive marketplace.
On May 26, 2023 State Farm General Insurance Company and on June 2, 2023, Allstate, California’s two largest insurance carriers, representing over 27 percent of the admitted insurance market in California, announced they would stop issuing new homeowners and commercial property insurance policies in California. Previously American International Group (AIG) notified thousands of homeowners in California that its policies would not be renewed following their 2023 expiration. Several others, representing an additional 36 percent of the market, announced plans to limit new policy origination.
The reduction of insurance options in the state has a direct negative effect on consumer access to coverage. In all parts of California, homeowners, business owners, and farmers are now unable to obtain new insurance policies.
According to San Bernardino County, “Access to insurance allows existing homeowners to protect what is for many their largest and most important asset, and empowers homebuyers to secure a mortgage for a home that can build generational wealth, but a scarcity of options may freeze real estate transactions and slow or stop the rate of new housing development, including attached dwelling units like affordable housing projects, apartments, and condominiums, exacerbating the state’s critical housing shortage.”
Californians who cannot obtain coverage are forced to apply for protection through the California Fair Access to Insurance Requirements (FAIR) Plan, a state-established risk pool intended to operate as California’s insurer of last resort providing temporary coverage as consumers pursue insurance in the traditional market. The collapsing market has caused steadily increasing enrollment in the FAIR Plan over the past five years, threatening the ongoing stability of the plan, putting what is for many their sole remaining safety net at dire risk.
According to San Bernardino County, “Policy decisions have placed Californians’ homes and businesses at risk of catastrophic loss that can only be prevented by stabilizing the homeowners insurance and commercial property insurance markets while providing rates that remain fair and affordable to consumers, and maintaining the ongoing viability of the FAIR Plan, which provides a vital safety net to Californians whose policies are nonrenewed and to homebuyers who cannot secure a mortgage without insurance.”
The California Insurance Commissioner has released draft regulations to address this immediate crisis but the Little Hoover Commission hearing on March 28, 2024, reports that reforms “will not go into effect until at least 2026, and it may take a few years after that for the market to react … this timeline, of course could be delayed further if lawsuits by any party, including insurers or consumers, were to occur.”
The California Insurance Commissioner has broad authority under California’s Insurance Code to adopt emergency regulations to promote the public welfare, to adopt emergency regulations governing the prior approval process for insurance rate change applications, and to adopt emergency regulations.
Supervisor Dawn Rowe, who said she has become increasingly concerned about county residents’ dwindling insurance options, introduced the resolution, which asks the state government, meaning Governor Gavin Newsom California Insurance Commissioner Ricardo Lara, and the state Legislature to declare a state of emergency and take all necessary steps to strengthen and stabilize the insurance industry in underwriting policies for homeowners and commercial establishments.
The lack of affordable insurance in high risk areas, which are expanding, has great potential to harm the economy, officials fear.
Exacerbating the circumstance is that both mountain and desert areas, of which San Bernardino County has a substantial selection, have in recent years experienced increasing wildfire disaster events. In 2023, San Bernardino County’s mountain communities were hit with a blizzard that did not abate for more than 17 days. Those disaster conditions have complicated the situation and made it far more difficult and expensive for homeowners and business operators to secure insurance. In many cases the expense of insurance is beyond the economic means of some homeowners, which has prevented, in certain circumstances, would-be buyers from completing real estate transactions.
Amid these struggles, county officials sought to take action. That action is intended, if the state will go along, to alleviate the struggles and burden on those who live in high-risk fire areas.
While there is doubtless some degree of legitimacy to the request being made, San Bernardino residents may not be the ideal supplicants and the San Bernardino Board of Supervisors might not fit the bill as the most effective advocates for the relief being sought, given to whom they are making the plea.
San Bernardino County, which against all odds and despite having substantially more Democrat voters than Republican voters, is one of the last bastions of Republicanism in California. Even though there are more Democrats in San Bernardino County than Republicans, San Bernardino County’s Republicans turn out to vote in far greater numbers than do their Democrat counterparts. Four of the county’s five supervisors are Republicans. In 17 of the county’s 24 municipalities, there are more Republicans on the city and town councils than there are Democrats. Put simply, Republican-dominated San Bernardino County is on the outs with Democrat-dominated Sacramento.
San Bernardino County is one of the few counties in the state in which Lara lost in the 2022 election for insurance commissioner. Of the 446,660 total votes cast in that contest in San Bernardino County, Lara captured 217,865 or 48.78 percent. In the 2022 contest, he was outdistanced by the Republican, Robert Howell, who polled 228,795 votes or 51.22 percent. In 2018, he fared even less well against Steve Poizner, who was the last Republican to hold the California Insurance Commissioner post from 2007 until 2011. Poizner was an unsuccessful candidate for governor in 2010, when he failed to capture the Republican nomination, losing to Meg Whitman. Before that, he was unsuccessful in his bid to be elected to the California Assembly as Republican, losing to Democrat Ira Ruskin. In 2018, despite Lara proving victorious in the race for insurance commissioner, he lost in San Bernardino County to Poizner, who had changed his registration to no party affiliation. Of the 513,350 votes cas for insurance commissioner in San Bernardino County that year, Lara received 247678 or 47.08 percent to Poizner’s 271,572 or 52.92 percent.
Another political consideration militating against the board of supervisors’ effort is the consideration that the majority of residents in San Bernardino County’s desert and mountain communities are solidly Republican. Among all of San Bernardino County’s 1,117,683 voters, 472,831 or 40.1 percent are registered as Democrats, while 354,588 or 30.1 percent are registered Republicans. The remaining 29.8 percent are either unaffiliated with any political party or are members of the American Independent, Green, Libertarian, Peace & Freedom or other more obscure parties. In San Bernardino County’s First District, however, which is comprised almost entirely of wide desert expanses, 79,812 or 35.1 percent of the district’s 227,405 total voters are Republicans while 78,036 are Democrats. In San Bernardino County’s Third District, which accounts for more than 90 percent of the county’s mountain communities as well as over a quarter of the county’s desert area, 89,912 or 37.3 percent of the district’s 240,857 total voters are Republicans, not quite fully offset by 80,695 Democrats or 33.5 percent. The largest number of Democrats in the Third District are in the district’s urban valley areas, whereas in the mountain and desert communities, Republicans outnumber Democrats by a ratio of about 11 to 6.5.
Moreover, Lara, who is himself highly partisan in favor of Democrats, has no use for Rowe, whom he perceives as a Republican party hack. This perception on Lara’s part came about because Rowe, early in her tenure as supervisor, hired two GOP dirty tricksters, Matt Knox and Dillon Lesovsky, respectively, as her chief of staff and policy advisor. While working in those official roles, they engaged in preparing campaign materials on behalf of selected Republican candidates and causes that Rowe was in favor of while simultaneously preparing political “hit pieces” attacking candidates she opposed.
Accordingly, Lara is not particularly favorably disposed toward assisting a population that is predominantly Republican and which has consistently voted in opposition to his serving as insurance commissioner.
Governor Gavin Newsom is similarly negatively disposed toward San Bernardino County.
While he managed a victory in San Bernardino County in the 2018 gubernatorial election against John Cox by capturing 276,874 or 51.54 percent of the 537,253 votes for governor cast in the county and in the 2021 recall election prevailed, barely with 288,877 votes or 50.22 percent of the 575,241 votes cast in county against the recall with 286,364 or 49.78 in support of removing him from office, Newsom’s showing in that regard was one of the worst in the entire state. In his 2022 run for reelection, he lost in San Bernardino County with 215,391 or 47.39 percent of the 454,500 votes cast to Brian Dahle’s 239,109 votes or 52.51 percent.
To add insult to injury, that same year the four Republican members of the board of supervisors agreed to put a measure on the November ballot asking San Bernardino County residents whether they wanted to secede from California and form their own state. That measure passed with 212,615 or 50.62 percent of the county’s 420,054 voters in favor of leaving the Golden State and 207,438 or 49.38 percent opposed.
The willingness of the governor, the insurance commissioner and the California Senate and Assembly, are to assist the residents who intend to obviate their governmental authority over them is subject to some doubt.