Somebody suggested I title this “Unlocking California’s Insurance Market.” And based on the testimony of Allstate’s Senior VP of Government Relations, Gerald Zimmerman, on April 23, that might be true. His testimony highlighted a pivotal moment for California's insurance landscape. Zimmerman declared that Allstate would resume underwriting in California immediately if allowed to utilize catastrophe modeling and include the net cost of reinsurance in their rates. "If the regulations were in effect today, we would begin selling new homeowner insurance policies tomorrow," Zimmerman stated during a public hearing.

At UWIB Risk & Insurance Solutions, we've heard similar commitments from multiple carriers. The barrier, it seems, is not regulatory feasibility but the political maneuvers of California’s Insurance Commissioner, Ricardo Lara. His tactics appear more focused on building his political influence than on addressing the urgent insurance needs of Californians—from homeowners to vehicle and business owners.

Insurance is fundamentally simple—it's about calculating a rate that covers anticipated claims and operational costs. Yet, there's a common misconception: if one pays $1,000 for insurance, they should receive $1,000 back, if not more. This misunderstanding skews expectations and inflates costs.

Growing up, I learned that insurance operates on the law of large numbers: small premiums from many balance out the few who need to claim. However, when unexpected massive jury awards or widespread disasters like fires occur, the financial stability of this system is challenged. Insurance carriers purchase reinsurance to protect against such significant losses, but Commissioner Lara's reluctance to include these critical costs in rate calculations is puzzling and shows a lack of financial acumen.

With over 50 years in the industry, working alongside various commissioners and serving a diverse client base, I’ve seen how political agendas can distort the insurance market. In California, this has led to a precarious situation where political gain trumps practical solutions.

So, what is the solution? I really have no flipping idea! But one approach could be to allow carriers to set their rates freely. This could create a highly competitive market where companies fiercely vie for business. The outcome might be messy, but it would at least offer Californians the chance to secure insurance—providing the essential peace of mind that comes with protection against catastrophic losses.

One thing seems obvious to me, it's time to cut through the political red tape and let practicality prevail. We need actionable solutions that reflect the real costs and risks, ensuring that everyone can access the insurance they critically need.

Short of such a miracle, our company is one of the most successful insurance brokerage facilities in the US, With its headquarters in Nashville, we’re licensed to practice across the country.

Contact us when you’re ready for a white glove experience and need solutions for even the most challenging risk and insurance problems.

We know what we’re doing.