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[Article] California governor hits the gas pedal on property insurance changes
In a recent Bond Buyer article, Triet Nguyen talks about the risks with uncertainty in the property insurance space. “The needs are escalating…”
As the Bond Buyer’s Keeley Webster writes, California Gov. Gavin Newsom is seeking to halt the trend of property insurers exiting the state by expediting how quickly they can increase rates.
California, Florida, and Louisiana have been hit the hardest by a wave of insurance companies exiting or reducing policies offered in areas of the state most at risk to extreme weather events, but Moody’s Ratings said every state has seen double-digit rate increases over the past five years.
Among the risks with uncertainty in the property insurance space is increasing dependence on the states’ insurer-of-last-resort programs as private insurers struggle or depart, said Triet Nguyen, DPC DATA’s vice president of strategic data operations.
In California, “nobody has any idea how to cover wildfire risks in terms of the actuarial analysis to know how capitalized they should be. If you are an insurance company that is your business, but do the state entities know how to manage this? Probably not,” Nguyen said. “The politicians have been compressing the premium to protect the consumer.”
The insurers’ actions are a red flag for municipal analysts, because difficulties in obtaining insurance could result in property values declining, which in turn would reduce tax coffers if assessed valuations drop, Nguyen said.
Read the rest of the Bond Buyer California Insurance article.
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