After helping major insurance companies flee the state, red tape from California’s liberal insurance regulator is poised to hinder Los Angeles-area communities from rebuilding after devastating wildfires.

In the Los Angeles wildfires, burnt out As of Monday, 40,000 acres of land had been covered and more than 10,000 buildings had been destroyed. force More than 100,000 people have been forced from their homes. Even when the fires are finally extinguished, many Californians will not be able to rebuild the homes they lost. That’s because a slew of home insurance companies have left the state in recent years, largely due to extensive government regulations, leaving many Golden State residents stuck with government-backed insurance. A last resort, or worse, no insurance at all. (Related article: ‘Excuses go viral’: California Democrats pave way for ‘Big One’ takeover of Los Angeles)

state farm In one area, the Pacific Palisades, the state announced it would end homeowners insurance coverage for tens of thousands of Californians in 2023. suffered the greatest blow By the wildfire — experience More policies Not updated More from State Farm than anywhere else in California. E. J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Herman Center on the Federal Budget, said the widespread elimination of home insurance is due to “overregulation.”

“Overregulation has been a major culprit, forcing many homeowners to ‘strike naked,’ in industry parlance, or roll the dice without insurance,” Antoni told the Daily Caller News Foundation. he said. “It would be horrifying to know how many people lost their homes without any insurance and couldn’t afford to rebuild.”

EATON FIRE: Today’s additional video #California | #Altadena | #Californiawildfires pic.twitter.com/FNUBvJMkm0

— Hailey Grace Gomez (@haileyggomez) January 9, 2025

california Proposition 103 Insurers must obtain state approval before setting property and casualty insurance rates; standard The upper limit for interest rate hikes is 7%. Andrew Siffert, senior vice president at global insurance broker BMS Group, said the regulation made it difficult for insurers to adapt to changing market conditions and ultimately led to many insurers becoming fully state-owned. This resulted in him being kicked out.

“Proposition 103 requires insurance companies to obtain approval from CDI.” [the California Department of Insurance] Raising rates could take time,” Siffert told DCNF. “Over time, this regulation has not kept up with the cost of doing business in California, making it difficult for insurance companies to adjust premiums to reflect the increased risks and costs associated with natural disasters such as wildfires. As a result, insurance companies are taking product and capital back to other states where they can maintain their profit margins.”

Like State Farm, allstate The company announced that it will stop accepting new home insurance policies in California in 2023. return Only once, in August, did the state approve an all-state request to waive the traditional 7% cap and raise homeowners’ insurance premiums by an average of 34%.

The California left has a hell of a gimmick. They have voters screaming about climate change while mismanaging taxes, neglecting forests, and driving insurance companies like State Farm out of the state.

— Common Sense (@DAngryAmerican) January 8, 2025

Proposition 103 also bar Prohibits insurance companies from using customers’ credit scores to determine rates.

“Another form of overregulation involves underwriting restrictions,” Peter Earle, senior economist at the American Bureau of Economic Research, told DCNF. “California will require insurers to use certain risk-based factors, such as credit scores and other predictive analytics, commonly used in other states to more accurately assess risk. This limits the ability of insurers to differentiate between low-risk and high-risk policyholders, forcing them to spread costs unevenly.”

Additionally, Prop. 103 would force the publication of the computer models used to calculate the rates. Companies often want to keep their modeling techniques private, resulting in insurers using outdated models for their calculations, said Mark Sektonan, vice president of state government regulation at the Property Casualty Insurance Association of America. said E&E News for May 2023.

“It’s a bit like driving a car using your rearview mirror when the windshield is right in front of you,” Sektonan said.

Palisade Fire: Homes destroyed near Bel Air Bay Club, one on fire, people living in the area trying to assess damage to their place I could see it. It was like a scene from a horror movie. @DailyCaller #palisadesfire | #Californiawildfires pic.twitter.com/zCLbl8wwHk

— Hailey Grace Gomez (@haileyggomez) January 10, 2025

California’s insurance shortage could be a significant obstacle to the state’s rebuilding after the wildfires, according to AccuWeather’s estimates of the impact of natural disasters. caused As of Monday, losses had exceeded $250 billion.

“California’s lack of insurance companies will significantly hinder the rebuilding process once the wildfires stop,” Earl told DCNF. “Insurance coverage is a critical element in assessing damage and providing the financial resources needed to rebuild homes, businesses, and infrastructure. With fewer insurance companies on the market, homeowners and business owners are certain they will receive coverage. “The state is facing higher premiums and fewer insurance options than other states in the United States.” (Related article: ‘Excuses go viral’: California Democrats pave way for ‘Big One’ takeover of Los Angeles)

The state has no private insurance, forcing many Californians to rely on insurance. FAIR plan — Government-backed insurance used as a last resort for homeowners can’t do it To get coverage in the private market.

FAIR achieved 164% increase It has been in demand since 2019 and has a lot of exposure. ballooning As of September last year, it was $458 billion, up from $153 billion four years ago. State-sponsored insurance programs have With only $377 million available to pay out insurance claims, Palisades alone has a $5.9 billion exposure and could soon face bankruptcy.

In addition to Proposition 103: California Environmental Quality Act (CEQA) A state law requiring extensive environmental reviews of building projects could also hinder California’s recovery efforts. study A paper published in 2018 by the law firm Holland & Knight found that the policy targeted housing projects, exacerbating supply shortages.

“CEQA is one of the most well-known culprits of California’s housing supply and affordability crisis,” Jennifer Hernandez, director of Holland & Knight’s West Coast Land Use and Environmental Group, wrote in an article. said. press release Present your research. “Now more than ever, there is a need to update the CEQA Litigation Rules to end extra-environmental abuses of this important California law.”

Democratic California Governor Gavin Newsom issued the following statement: presidential order On Sunday, California Republican Rep. Jay Obanorte suspended CEQA because of fire-ravaged developments, but Republican California Rep. Jay Obanorte told the DCNF that the bill would fuel “California’s ongoing housing crisis” and disrupt the lives of displaced residents. He said much of the damage from this policy has already been done by making it even more difficult. Californians are seeking shelter. (Related article: Biden and Newsom’s EV push adds another wrinkle to Californians’ wildfire evacuation plans)

“The ongoing fires in Los Angeles are exacerbating California’s ongoing housing crisis, and CEQA is a key factor,” Obanorte told DCNF. “This regulation will continue to hinder Angeleno residents’ ability to rebuild after this devastating disaster and hinder families’ ability to secure affordable housing by slowing construction and increasing costs. It is time for our state to reform CEQA to effectively address the housing shortage and prioritize the needs of our residents.”

Housing costs are high because contributed A large-scale migration outflow of over 690,000 people from California set off Golden State from 2022 to 2023 alone.

The median rent in California is approximately $2,800. According to Zillow data updated Monday is 40% higher than the national average. Rent in Pacific Palisades is even higher, at just over $2,900. According to Visit the online rental marketplace Apartments.com.

Zach Roday, a spokesman for the conservative watchdog Public Worker Union Accountability Board, echoed Obanorte’s sentiments about Newsom’s repeal of CEQA. Mr. French Laundry likes to think of himself as emperor, but it doesn’t take a historical catastrophe or a failure of progressive governance to make him realize what Californians have been saying for years. do not have. ”

Mr. Newsom’s office and the California Department of Insurance did not respond to requests for comment.

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