Consumer Group Applauds Move; Says Rate Decrease Will Allow More Californians to Get Insured
Santa Monica, CA -- The California Earthquake Authority voted to slash earthquake insurance rates by 22.2% today. The rate cut, which still must be approved by the Insurance Commissioner, will provide relief to customers who have been paying excessive premiums for their earthquake policy in recent years. It will also result in increased sales to homeowners who have not purchased the optional coverage because of its high prices, according to the nonprofit Foundation for Taxpayer and Consumer Rights (FTCR).
The following is excerpted from FTCR Executive Director Douglas Heller's letter to the CEA Board in support of today's decision:
"The proposed decrease will provide much-needed relief to California homeowners, while maintaining the financial security of the CEA. We also believe the proposal will stimulate policy sales, which is in keeping with the important public policy goal of increasing the number of California homeowners who have access to ' and actually purchase ' a reasonably priced earthquake insurance policy.
"Too many California homeowners have not purchased or have dropped earthquake coverage in the years since the Northridge earthquake, because the cost of insurance has been prohibitively expensive. As a result, the vast majority of California homes will not be insured when the Big One hits.
"If, when California experiences its next severe earthquake, the state's homeowners are as unprotected as they are today, the public costs will be staggering. Although bureaucrats and insurers often warn that there will be a lack of public assistance in the wake of disaster, public decency inevitably calls upon taxpayers to provide relief for those who are uninsured. When insurance premiums are inaccessibly high, it is impossible to argue against government relief. Only as rates come down and homeowners purchase earthquake insurance, will the public treasury see its risk in the wake of a quake diminish. In other words, in order to save taxpayers from being the de facto earthquake insurer in California, rates must come down.
"The 22.2% decrease proposed to the board represents a substantial savings for existing and prospective earthquake insurance consumers. FTCR believes that this decrease will mark the beginning of an essential expansion of coverage in the state."
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