Disaster Insurance Measure Dies In Calif. Assembly

NU Online News Service, June 25, 3:07 p.m.EDT?A California state bill designed to limit insurers'ability to rescind policies or raise rates for homeowners who fileclaims related to natural catastrophes was defeated in the AssemblyInsurance Committee this week.[@@]

In reaction, proponents of the bill expressed bitterdisappointment and vowed to reintroduce the measure. InsuranceCommissioner John Garamendi, who advocated the bill, said thestate's wildfire victims had been "burned again" by insurers.

Insurers and their representatives expressed relief at thecommittee action and said it would help assure policyholders andthe consumers are best served when carriers are allowed to use allthe tools available, including past claims history.

The vote on the legislation, S.B. 1474, introduced by stateSenator Martha Escutia, D-Whittier, needed nine votes in favor topass out of committee, but fell three votes short when panelmembers voted 6-3 in favor. During the voting, four legislatorswere absent, while four others abstained.

S.B. 1474?which was a major part of Commissioner Garamendi'sHomeowners Bill of Rights initiative?was intended to limit insurersfrom rescinding policies, hike premiums or eliminate policydiscounts in response to claims related to a natural cause(earthquake, lightning, hail, floods) or fires that began onsomeone else's property.

According to the California Department of Insurance, the measurewould have helped many victims of last year's devastatingwildfires, including those who have been unable to get coveragesince filing a claim for destroyed property, or those whosepolicies have been or may be nonrenewed in the future because theymade a fire claim.

In a statement, Sen. Martha Escutia and Commissioner Garamendisaid they will reintroduce the measure to help protect the rightsof homeowners who file claims.

"This disaster took 24 lives and burned 3,600 homes from SimiValley to San Diego," said Commissioner Garamendi, referring tolast summer's wildfires. "Now, the victims of those fires are beingburned again as insurance companies deny them the coverage theyneed to rebuild their homes and their lives."

"We will not give up until every past and future victim of sucha disaster is protected from insurance companies who cancel themafter a legitimate claim," Sen. Escutia added.

Commissioner Garamendi also said components from S.B. 1474 wouldbe put into other, already existing legislation and taken directlyto the House and Senate chambers for votes. "This?use-it-and-lose-it' syndrome must end," the commissioner said."Californians should not be afraid to use their policies when theyhave a legitimate claim."

Sam Sorich, president of the Association of California InsuranceCompanies, which represents over 300 property-casualty insurersdoing business in California, applauded the decision by the StateAssembly Insurance Committee.

Mr. Sorich remarked that consumers are best served when carriersare "allowed to operate in an open and competitive market, usingall the tools available to provide a valuable product at areasonable price."

Mr. Sorich said the rejected bill, S.B. 1474, would have"dramatically restricted a homeowner insurer's ability to considerpast claims history."

"If allowed to become law, homeowners with infrequent claimswould have been forced to pay higher premiums to subsidize thefrequent losses claimed by other policyholders," he said.