The American Property Casualty Insurance Association (APCIA) has issued a statement in response to litigation filed by Consumer Watchdog against the California Department of Insurance and Insurance Commissioner Ricardo Lara.
The legal challenge aims to block insurance companies participating in the California FAIR Plan from recovering assessment costs by passing them on to policyholders.
In a statement, Denni Ritter, APCIA’s department vice president for state government relations, said the lawsuit could worsen California’s ongoing insurance crisis.
Ritter said that efforts to block insurers from recovering FAIR Plan assessments threaten the viability of the FAIR Plan itself, a key safety net for homeowners who cannot find coverage in the traditional market.
“Consumer Watchdog’s lawsuit is a reckless and self-serving stunt that threatens to make California’s insurance crisis even worse and harm the consumers Consumer Watchdog purports to represent,” Ritter said.
“Insurers are committed to helping Californians recover and rebuild from the devastating Southern California wildfires,” Ritter said. “Insurers have already paid tens of billions in claims and contributed more than $500 million to support the FAIR Plan’s solvency – even though they do not collect premiums from FAIR Plan policyholders.”
She said that spreading the cost of FAIR Plan assessments across a broader insured base is necessary to maintain market stability. According to APCIA, barring insurers from recovering these costs could further restrict insurance availability and increase the risk of broader market disruption.
Consumer Watchdog filed the lawsuit to prevent what it describes as hundreds of millions of dollars in potential surcharges from appearing on homeowners’ insurance bills.
The litigation raises questions about the long-term implications for California’s property insurance market, particularly as wildfire frequency and severity continue to rise.
APCIA said that the lawsuit, if successful, would shift more financial pressure onto insurers already operating in a constrained environment and potentially limit access to insurance options for a wider segment of consumers.
The state is already moving along with its plans to further stabilize the FAIR Plan, with Assembly Bill 226 passing in a unanimous vote earlier this month.
The bill would authorize the California FAIR Plan to access additional financial capacity through the issuance of bonds or the establishment of a line of credit, following a recent $1 billion assessment issued by the FAIR Plan.
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