The Fight for "FAIR" Insurance Rates

Recently CalOHA President and CEO, Dyana Kelley was invited to speak at a hearing regarding the California State Insurance FAIR (Fair Access to Insurance Requirements) Plan.  Dyana presented to Commissioner Lara the challenges we are facing as an industry relating to affordable and equitable coverage. 
 
Following the hearing Dyana spoke at a board meeting for the California Travel Association and presented those challenges.  Cal Travel determined that these challenges could have a trickle down effect on tourism and therefore decided to pull together a task force of other associations who have been affected. 
 
On August 30th, CalOHA, Ski California, and CABBI (California Association of Bed & Breakfasts and Inns) met with Commissioner Lara to discuss solutions. 
 
The task force discussed with the commissioner the issues associated with underwriting based on zip code. Many businesses go to great lengths to protect their property with mitigation strategies and should be rewarded for their efforts rather than lumped in with all businesses and homeowners within a zip code region.  Additionally, the limited perils of the Plan do not provide for equivalent coverage and in many cases at a much higher rate. 

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In some respects, the state Department of Insurance hands are tied.  The department does not have the authority to force an insurance company to continue writing business in California or what risk classes the company chooses to accept.  Additionally, the department does not have authority over the state FAIR Plan or the coverages it chooses to offer.  The California FAIR Plan Association provides basic fire insurance to businesses that cannot get insurance through a preferred property insurer.  The FAIR plan is not a state agency or a public entity.  The FAIR Plan is an insurance pool comprised of all insurers licensed in California. The FAIR Plan issues policies on behalf of its member companies. Each member company participates in the profits, losses and expenses of the Plan in direct proportion to its market share of business written in the state.  Unfortunately, the FAIR Plan has been the only option for many of our member parks.  
 
However, Commissioner Lara felt that rebates and rate reductions for mitigation was an area in which the department could get involved and make a difference.  Commissioner Lara has proposed a wildfire safety regulation that will help drive down the cost of insurance. The proposal would require insurance companies to recognize consumers’ wildfire mitigation actions in their rate filings. In particular, the rule incorporates the new Fire Risk Reduction Community designation from the Board of Forestry.  We believe this regulation will aid all efforts to increase wildfire safety and provide rate decreases for those businesses who take extra precautions. 
 
Along with rebates and rate reductions, the department is working with the FAIR Plan Association to increase the number of perils provided under the plan coverage however, there is an strained relationship between the FAIR Plan and the department so finding middle ground on an equitable policy could be a challenge. 
 
While the process is slow, it is moving and CalOHA has ensured that our industry is on the radar and they are working on strategies to alleviate some of the burden. If you have an extreme case of a rate increase or inability to obtain coverage please reach out to our office.  Commissioner Lara is interested in working with individual businesses who are finding hardship with their current coverage.  ​

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