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Consumer advocate calls out insurance commissioner as major insurers stop selling new policies in California

Two of California’s largest insurers are no longer writing new homeowner policies in the state.

Allstate said it’s trying to protect current customers.

“The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes, and higher reinsurance premiums," the company said in a statement.


State Farm said it made its decision “due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.”

Harvey Rosenfield, the founder of Consumer Watchdog, a nonprofit consumer advocacy group, said he's not buying it.

"Insurance companies selling homeowners insurance in California over the last 20 years or so have made four times the profit in California than they do on average nationally," Rosenfield said. "And during this period of time, when they claim they're broke and they can't afford to sell insurance anymore, they actually took in $77 billion more than they paid out in claims."

Both companies recently asked for rate increases as well. Rosenfield doesn't think that's a coincidence.

"We think what they’re trying to do is bully the (state insurance) commissioner and hold a knife at the necks of the people in California and say, ‘If you don’t give us these rate increases and make our customers pay a billion dollars more in homeowners insurance we’re gonna punish you,’" Rosenfield said.


The companies also cite climate change as a major reason for their decisions. And although California has suffered several record breaking wildfire seasons — with damages and losses in the billions of dollars — and experts predicting climate change will only make things worse, Rosenfield said it's just a scare tactic.

"Insurance companies are using climate change as an excuse to create an artificial crisis in the marketplace and bully their way into billions of dollars of rate increases," he said.

Rosenfield is also the author of Proposition 103, or the Insurance Rate Reduction and Reform Act. Fed-up California voters passed it in the late 80s, when car insurance became unaffordable. In those days, most of the country paid hundreds of dollars to insure their cars — and Californians paid thousands.

"The voters passed a law to prevent this kind of behavior because we’re experiencing the same crisis in the 1980s that we're experiencing today. Insurance companies were pulling out of the marketplace for auto, home, business, small business daycare centers, nonprofits. We had no control over what they were doing and the voters revolted," he said.

The proposition slashed rates and made it illegal for companies to raise them without permission from the state insurance commissioner.

The law also gave Californians the power to elect an insurance commissioner, instead of having one appointed by the governor.

Insurance commissioner, Ricardo Lara declined an interview with KPBS, but recently told Sacramento TV station KCRA he wasn’t planning to take action against the insurance companies, claiming he did not have the authority.

That didn't sit well with Rosenfield.

"A law by itself means nothing if it’s not enforced," he said. "So, I’m telling you today if the commissioner does not enforce the law, we will take a legal action against him."

Insurance Commissioner Lara’s staff said he could not meet our deadline. We responded, we will make time any day he is available. That invitation still stands.