California senate committee addresses condo insurance crisis

SAN DIEGO — The solution to California’s wildfire insurance crisis may be higher insurance rates for all homeowners — that’s what industry experts said while testifying last week before the California Senate Committee on Insurance.

CBS 8 has Work for You, spoke to condo owners whose policies were canceled due to fire risk.

Over the last six months, Mira Mesa condo owner Paula Southwick has written about 20 letters to politicians, governors, and even the President of the United States.

“I’m trying to cover for anyone who I think can influence the situation,” Southwick said.

Farmers Insurance recently canceled its policy covering more than 1,000 condos in San Diego due to wildfire risks, including 240 condos in Southwick’s Canyon Park Villas.

The Canyon Park Villas condo association was able to bundle policies that were much more expensive in the surplus market, leading to increased monthly HOA fees and huge custom assessments on each owner.

“We had to pay $2,500 to cover our increase in premiums from $47,000 to $600,000 per year,” said Southwick.

Last week, Southwick finally saw signs that his letter-writing campaign might be paying off. He saw the condo owner testify before the California Senate Committee on Insurance in Sacramento.

One of the owners who testified, Lisa Meyer, also saw a large increase in her HOA fees after the policy of her 186-unit complex at Santee was not renewed.

“What scares me the most is I recently had a discussion with our broker and industry expert, and the predictions are that it will be even worse for our next update,” Meyer testified.

The committee heard from Victoria Roach, president of California’s FAIR Plan, the ultimate resort safety net insurance, which is currently unable to cover large condo complexes because the required policies are above the FAIR Plan maximum.

The FAIR plan is financially backed by a private insurance company in California.

“Who will pay? These insurance companies don’t have a basket of money that they can withdraw from absorption. Correct? Ultimately, that money will flow to policyholders with higher premiums,” Roach testified.

If a solution is not found soon, Southwick is worried that people will start to lose their condos.

“This will ultimately lead to homelessness and add to the housing crisis,” Southwick said.

State insurance committee hearings are informative in nature, so there is no voting.

State Insurance Commissioner Ricardo Lara recently tweeted, “Expanded coverage options for HOAs and community associations, including a stronger FAIR Plan, are a top priority for my new term.”