Wider Availability of Homeowners Policies Seen

Homeowners insurance has become much more widely available to California buyers than in 1995, with 107 companies now offering policies on an unrestricted basis compared to just four then, state Insurance Commissioner Chuck Quackenbush reports.

A survey taken by the Insurance Department has found that increases in premium prices have stabilized below the rate of inflation, with an average rise of 2.6% between March 1996 and October 1997, the commissioner said.

As a result, calls to the department’s homeowners insurance hotline have dropped sharply, Quackenbush said, from 3,000 calls in July 1996 to just 183 in September 1997.

The findings from two departmental studies echo a persistent Quackenbush reelection campaign theme that the creation of a state earthquake insurance agency brought the insurance companies back into the homeowners market.

The companies had argued that their high exposure to earthquake losses after the 1994 Northridge quake had induced them to stop selling all new homeowners policies.

The California Earthquake Authority, the new state insurance agency, came into being in December 1996. Companies holding 71% of the homeowners market now refer all of their customers to this agency for the purchase of quake insurance.

Consumers Union, which opposed the earthquake insurance plan sponsored by Quackenbush, has long contended that political pressure after the announced 1994-96 freeze on business helped induce the Legislature to create the Earthquake Authority.

Judith Bell, West Coast director for Consumers Union, said Tuesday that much of what Quackenbush reports about the availability of homeowners insurance appears to be true.

But she contested his statements that the availability in 1995 was so low. She said checks with insurance agents at that time indicated that, with some effort by consumers, it was available.

Bell also suggested that the commissioner’s statements about small price increases might be distorted. Some companies have been raising prices by revaluing homes upward, thereby getting higher premiums, she said. But it is true, she acknowledged, that the largest seller in California, State Farm, has withdrawn a proposal for a general price increase.