Opinion: California’s insurance crisis is worsening the housing crisis

California’s homeowners insurance crisis is making it more difficult to build and buy affordable homes — and in some cases impossible. By restricting the supply of housing, particularly condominiums and multi-family housing, lack of insurance availability is driving up consumer housing costs and limiting the lowest priced homeownership option for consumers.

Home builders were reassured when Insurance Commissioner Ricardo Lara announced his “Sustainable Insurance Strategy.” Lara deserves credit for trying to address bureaucratic delays in insurance rate reviews that contribute to the problem. Making the regulatory process more efficient will help restore a competitive insurance market.  So will his plan to allow insurance companies to incorporate forward-looking catastrophic modeling and the cost of reinsurance into their rates.

Californians have long been served by some of the strongest insurance consumer protections in the nation. When insurers seek to change rates, they must submit extensive documentation to the Department of Insurance (CDI) to justify the request. Each request is reviewed by CDI’s Department’s lawyers, actuaries and insurance experts who advise the Insurance Commissioner to accept, deny, or adjust the proposed rate change. In addition, outside parties – or “intervenors”– can provide independent input to CDI.

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