Insurers won’t be forced to offer home coverage after measure dropped
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- Consumer Watchdog withdrew its ballot initiative that would have required California insurers to offer coverage to homeowners who fireproof their homes.
- The move came after a competing industry measure was similarly dropped, in what the consumer group called an “armistice” safeguarding Proposition 103’s consumer protections.
- Despite the truce, California’s insurance crisis persists as carriers flee high-risk areas, leaving over 625,000 homeowners reliant on the state-run FAIR Plan.
An initiative that would have required California insurers to offer policies to homeowners who fireproof their houses has been withdrawn after the backer of a competing industry measure similarly did so.
The mutually agreed-upon move means the consumer protections offered by California’s landmark Proposition 103 will remain unchanged. The 1988 measure established an elected insurance commissioner with authority to reject insurer requests for rate hikes.
Consumer Watchdog, the Los Angeles advocacy group that proposed the Insurance Policyholder Bill of Rights, acknowledged it didn’t have the money to pursue the ballot measure, even though it said it deserved to become law.
A leading consumer group is proposing a policyholder rights initiative that would require insurers to offer coverage to California homeowners who fireproof their homes — or lose the right to sell home or auto insurance in the state for five years.
“There is still a huge need for many of the other protections in the ballot measure, including the right to be guaranteed an insurance policy if homeowners meet state wildfire mitigation standards,” the group stated.
Three Consumer Watchdog officials, including founder Harvey Rosenfield — also the author of Proposition 103 — submitted the measure for the November 2026 ballot in September after Elizabeth Hammack, a Roseville, Calif., insurance broker, had submitted her measure.
The broker’s initiative — the California Insurance Market Reform and Consumer Protection Act of 2026 — would have allowed insurer premium hikes to take effect before any rate review, though they could be suspended later if the insurance commissioner determines the market is not “reasonably competitive.”
Insurers would have to provide premium credits to policyholders who take steps to reduce fire dangers on their property.
The measure also would have abolished another core element of Proposition 103, by banning payments to “intervenors” such as Consumer Watchdog, which involve themselves in the rate-review process and typically seek to block or reduce increases — a provision that has irked the industry since its inception.
Insurance Commissioner Ricardo Lara in October proposed his own regulations that would tighten reimbursements and other rules governing intervenors. He contends the process slows legitimate rate hikes while enriching intervernors.
Insurance Commissioner Ricardo Lara has proposed stricter funding rules for consumer groups that challenge insurer rate hikes under California’s landmark Proposition 103.
Consumer Watchdog dubbed the decision to withdraw the competing ballot measures an “armistice” and vowed to spend next year building support for a mandate requiring insurers to sell policies in “higher risk areas.”
Hammack, owner of Panorama Insurance Associates, said she met with Consumer Watchdog at the secretary of state’s office in Sacramento on Tuesday to file papers to withdraw the measure, which she thought was given a misleading title and summary for the ballot.
“I wrote this measure to fix what I saw was broken, as an insurance agent and concerned California citizen, and to strengthen oversight, increase transparency, and restore stability to California’s collapsing insurance market,” she said. “Unfortunately, now, California consumers will continue to be burdened by costly outdated regulations.”
The issue over whether insurers should be required to offer policies to homeowners in fire-prone neighborhoods has gained significance over the last several years as many insurers have either dropped customers or stopped writing new policies after a series of catastrophic wildfires.
As insurers withdrew from the L.A. market, more homeowners joined the FAIR Plan. Now Jan. 7 fire victims are battling with the state’s insurer of last resort to get compensated.
A plan by Lara to encourage insurers to write such policies by offering them various concessions has so far failed to depopulate the California FAIR Plan, where homeowners can obtain policies when they cannot get them on the regular market.
The Los Angeles-based insurance pool, operated and financially backed by the state’s licensed home insurers, offers limited policies that typically cost more than those offered by commercial insurers.
The plan’s active policies grew 93% from September 2021 to September 2024, and then grew an additional 39% in the next 12 months. As of September, the plan had about 625,000 active dwelling policies, exposing it to about $647 billion of risk.
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