2 Insurers to Resume Sale of New Home Policies
The California homeowners insurance market is pointed toward early revival, with two major companies saying Tuesday that they will resume sales of new policies, and word that the state is reinstituting sales of its FAIR plan policies of last resort.
Apparently, prospects for an early start-up of the California Earthquake Authority are fueling moves toward market recovery, even though the new state agency remains in a pricing controversy.
The announcements Tuesday came from Allstate, saying it was reentering the homeowners market Nov. 4, and the Farmers group of companies, saying it would reenter the market Dec. 1.
Allstate and Farmers said they will have restrictions, but called their reentry moves as fairly broad.
By reducing private insurance companies’ exposure to quake losses, the new earthquake authority was expected to encourage companies to sell more homeowners insurance.
Insurance Commissioner Chuck Quackenbush also announced Tuesday that he is reactivating the FAIR plan statewide Nov. 15 for six months.
He will restrict the wider FAIR plan sales to bare-bones property insurance and not include any earthquake coverage.
In reviving the plan temporarily, Quackenbush is recognizing that the market for homeowners insurance is still tight and restrictions by many companies will persist for a few months.
Under the FAIR plan, those who cannot buy insurance through regular markets buy it through the state program, but usually at a higher price.
Quackenbush ordered FAIR plan sales sharply limited to small zones of poverty and fire danger May 31 at the height of the legislative battle over creating the earthquake authority. He said then that with few companies selling homeowners insurance, the FAIR plan alternative was being too widely used, and that a disaster could bankrupt the state’s system as well as insurers supporting it.
Now, with the markets reopening, the commissioner believes he can risk some expansion of the FAIR plan temporarily.
The company announcements Tuesday represented a victory for Quackenbush, who has long said that the earthquake authority would ease market conditions.
But this week, he is mostly campaigning for Proposition 213, including appearing in a series of television commercials.
Proposition 213 is a ballot measure he is sponsoring to restrict auto accident damage recovery by uninsured motorists, drunk drivers and fleeing felons.
His campaign manager for Proposition 213, Rex Frazier, said that $3 million has been raised on behalf of the measure, a very large part of it from insurers. State Farm has acknowledged giving $735,000 and Farmers has donated $300,000.
Quackenbush’s role in the campaign came under fire Tuesday from Bruce Brusavich, head of the Los Angeles trial lawyers organization.
Brusavich charged that Quackenbush has been “shaking down” insurance companies for contributions to the pro-Proposition 213 campaign and that his aim in the commercials is to gain exposure for a 1998 GOP challenge to Democratic Sen. Barbara Boxer.
Frazier branded Brusavich’s shakedown accusation as a “muddy smear.” As for Quackenbush running against Boxer, he said: “The only plan I’ve heard of is for the commissioner to run for reelection.”
