California history is littered with too-fast remedies that haven’t stood the test of time, Insurance Commissioner Ricardo Lara told legislators questioning why his department can’t move more quickly to solve a property insurance marketplace crisis. “If we lose in court over process, not substance, that would be the ultimate failure,” Lara told the state Assembly Insurance Committee, while renewing his commitment to enacting a package of reforms by year-end. It can’t be done more quickly, he said, because “we don’t want much-needed reform to be tied up in avoidable litigation” over state-specific transparency rules under the decades-old, voter approved Proposition 103. The California Department of Insurance plans to introduce changes in July to allow primary insurers to include the cost of reinsurance in rate filings if they agree to write coverage in areas at risk of wildfire and reduce enrollment in the FAIR Plan, Lara said. But that transition back to private coverage won’t happen as intended unless the CDI also approves adequate rates for the FAIR Plan, said John Norwood, on behalf of the Independent Insurance Agents & Brokers of California. Property insurance is a “very price sensitive product.” Lower rates at the FAIR Plan, even if the coverage isn’t complete, would hamper the process, said Norwood. He cited a wide gap between a recently requested and approved rate hike for the insurer of last resort. Also, he heard concerns recently from reinsurers that the state is “still failing to spend enough on fire resilience... It’s going to have to be an ongoing commitment.” Under the pending proposal include reinsurance costs in filings, carriers will be required to submit the net cost only for California. “We will not carry the cost of other states,” Deputy Commissioner Lucy Wang told the committee. Another hold-up is expertise. The department is hiring personnel capable of creating actuarial formulas to incorporate the addition because no one on staff could do that, said Wang. “It’s not as simple” as just writing up a new regulation. CDI leaders appeared before the Assembly committee on May 15 to update legislators on their progress. So far the CDI has proposed language changes intended to speed the rate-decision process and released plans to allow insurers to include forward-thinking catastrophe models in filings. The department had to take into account privacy concerns. “Modeling companies do not want to submit their models under Prop 103 because it is subject to complete public transparency,” and with the attendant intervention process a review could take one-to-two years, said Wang. Speakers at a hearing on the proposed inclusion of wildfire, terrorism and flood forward-looking models worried that the CDI’s proposal would still bog down the process. Lara said his regulatory actions will take effect much faster than a legislative route. He thanked legislators for providing needed money to expand his 1,400-employee department, offer overtime to current staff and hire consultants. Assemblyperson and Committee Chair Lisa Calderon told Lara, “It’s no easy task. You’ve been clear and upfront about a Dec. 31, 2024 deadline to complete your strategy. But I must say, time is running out.” Lara said Californians are already seeing signs of improvement in the market, calling out several announcements by insurers, including Mercury General’s plan to assume personal lines business exited by Tokio Marine and Farmer’s plan to reopen most of the multiperil commercial lines it closed to new business last year, "We need to be thorough, thoughtful and deliberate. I do not want another insurance commissioner to be back in front of you in five or 10 years because these regulations could not be implemented and do not meet the mandate of Proposition 103,” said Lara. Each of the 10 largest homeowners writers in the state have been approved over the past five months for what he said were justified rate increases, underscoring the “tremendous urgency that my department is showing during this crisis. "You’ve heard this before but it bears repeating: We are on our way to enacting the state’s largest insurance reform in 30 years...  Prop 103 was less than two pages of text. And It took years of regulatory work, dozens of rulemakings and even scores of litigation to make that landmark initiative a reality,” Lara said. "Now we are facing the accumulated stress of decades of long-needed reforms and quite frankly neglected decisions. For years, insurance companies submitted rate requests less than what they need largely because of the stagnant intervenor process that we have only in California. We are compressing decades of this deferral and delay into a one-year timeline of action,” according to the commissioner. The five largest homeowners multiperil writers in California in 2022, based on direct premiums written, were: State Farm Group, with a 20.58% market share; Farmers Insurance Group, 14.46%; CSAA Insurance Group, 6.66%; Liberty Mutual Insurance Cos., 6.43%; and Allstate Insurance Group, 6.36%; according to BestLink. The five largest writers of commercial multiple peril coverage in California in 2022, based on direct premiums written, were: Farmers Insurance Group, with a 14.23% market share; Travelers Group, 10.54%; State Farm Group, 6.84%; Chubb INA Group, 6.45%; and Nationwide Property & Casualty Group, 6.43%, according to BestLink.