SAN DIEGO — California's Department of Insurance has a plan to address the state's ongoing homeowners' insurance crisis, with the goal of enticing insurance companies to resume writing policies in the state. However, consumer advocates are raising concerns that the proposed reforms may result in higher costs for homeowners.
Insurance Commissioner Ricardo Lara has introduced the Sustainable Insurance Strategy, which he believes will revitalize California's insurance market by mid-2025.
"With the reforms that we're proposing, I'm very confident that we're going to see some real change," Lara stated. "We're going to see that California is back open for business. We're going to see insurers coming back to California."
The strategy includes several key components:
• A faster rate approval process
• Implementation of forward-looking catastrophe modeling
• Reforms to the California FAIR Plan
• Allowing insurers to factor reinsurance costs into rate hike requests
While Lara acknowledges that the plan is favorable to insurance companies, he argues that it's necessary to maintain a thriving insurance market in the state.
"I need to make sure that I have a thriving insurance market in the state. That means I have to make sure insurance companies are making a reasonable amount of money to be able to stay in business, grow and be able to maintain their solvency," he explained.
However, consumer advocates are skeptical of the plan's benefits for homeowners. Carmen Balber, Executive Director of Consumer Watchdog, warns that rates could increase dramatically.
"The last estimate that was put into the legislature by a national insurance expert was that rates would go up 30 to 50% overnight," Balber said.
The insurance crisis has already impacted many California homeowners. Poway resident Fran Lancaster saw her annual premium jump from $1,500 to $4,200 after installing a new roof.
"The minute they found out where my house was, they said, 'No, we're not going to even write you a policy,'" Lancaster recounted of her attempts to find alternative coverage.
Consumer Watchdog suggests an alternative approach, proposing that the state leverage insurers' profitable auto insurance business to ensure coverage for homeowners who take steps to reduce fire risk.
"We need a mandate that says if you want to sell home and auto insurance in California, you have to sell to Californians and communities that harden their homes," Balber proposed.
As the debate continues, California homeowners like Lancaster are left grappling with rising costs and limited options.
"Here in Poway, California, we're paying for what happened with the Paradise fire, what happened in Malibu, what happened just last week in the LA area," she lamented.
The Insurance Commissioner's plan is set to take effect by the end of the year. Its impact on consumers remains to be seen.
WATCH: Extended CBS 8 interview with Consumer Watchdog executive director Carmen Balber: