Placer County Calls For Emergency Declaration In Insurance Crisis - To The Point with Alex Bell

Published Date: 09/18/2024

Placer County Declares an Insurance Emergency: What It Means for California Homeowners

When wildfires burn through California’s forests, the devastation is visible — scorched hillsides, destroyed homes, and displaced families. But there’s another crisis, quieter yet equally destructive, spreading across the state: the collapse of California’s homeowners’ insurance market.

This time, the alarm isn’t coming from insurance companies or state regulators. It’s coming from Placer County, whose leaders have asked Governor Gavin Newsom to declare a state of emergency — not for fire or flood, but for insurance.

Their plea underscores the growing desperation of homeowners who’ve seen their policies canceled, premiums skyrocket, and the private insurance market retreat deeper into crisis.

In a recent segment of To The Point with Alex Bell on ABC10, the situation was laid out with clarity and urgency. From Rocklin’s suburban neighborhoods to the rural foothills, Californians are discovering that even “safe” areas are no longer immune to the state’s insurance turmoil.

A Crisis Hitting Every Zip Code

Take Rose Gonzalez, who lives in the Whitney Ranch neighborhood of Rocklin — a master-planned community that, until recently, seemed far removed from the wildfire zones making headlines.

Then came the letter from her insurer, Kemper, notifying her that her homeowners policy would not be renewed. The reason? Wildfire risk.

“It basically says that we were in a wildfire area,” Gonzalez told reporters.

Her annual premium jumped from $1,600 with Kemper to $1,900 with her new carrier, Bamboo Insurance. That’s a manageable increase compared to what homeowners in nearby rural areas are facing — some paying several thousand dollars more per year for less coverage.

“It’s truly a crisis,” Gonzalez said.

She’s not exaggerating. According to a Placer County survey conducted in July 2024, more than half of homeowners reported that their policies were either non-renewed or renewed at significantly higher cost.

And this isn’t isolated. Neighboring Shasta County and San Bernardino County have passed similar resolutions urging Governor Newsom to declare a statewide emergency.

Why Placer County Is Demanding Action

On September 2024, the Placer County Board of Supervisors voted unanimously to adopt a resolution calling on Newsom, Insurance Commissioner Ricardo Lara, and the Legislature to take immediate action to stabilize California’s insurance market.

Supervisor Bonnie Gore summarized their position simply:

“We just felt it was time to make a strong statement.”

The county’s letter to Sacramento urges:

• Emergency regulatory measures to speed up insurer rate approvals.
• Legislative reforms recognizing wildfire mitigation work in pricing and renewal decisions.
• Support for local fire-safe communities that have invested heavily in risk reduction but still face cancellations.

The frustration is understandable. Placer County has more “Firewise” certified communities — neighborhoods that have completed wildfire preparedness and defensible space programs — than any other county in the nation. Yet those efforts often don’t translate into insurance savings or guaranteed renewals.

As one homeowner wrote in the survey:

“Doing the defensible space work makes you feel better, but it doesn’t result in any savings or protection from cancellation.”

The Broader Insurance Breakdown

The crisis Placer County describes is part of a larger statewide pattern that has been years in the making.

Over the past five years, major insurers like State Farm, Allstate, Farmers, and USAA have pulled back from California’s property insurance market. Wildfire losses, inflation-driven construction costs, and a decades-old regulatory structure have combined to make underwriting in the state increasingly unprofitable.

When private insurers withdraw, homeowners are left with only one fallback: the California FAIR Plan, a bare-bones policy meant as a temporary safety net.

But with hundreds of thousands now enrolled, the FAIR Plan has ballooned beyond its intended purpose — and its financial stability is under pressure.

“That’s California’s bare-bones, high-cost insurer of last resort,” Bell noted.

For many, it’s the only coverage they can get. But FAIR Plan policies lack essential protections, like water damage or liability coverage, unless homeowners purchase expensive supplemental “Difference-in-Conditions” policies.

What the State Is Doing — and Why It’s Not Enough Yet

Commissioner Ricardo Lara has acknowledged the depth of the crisis. In 2023, he introduced his Sustainable Insurance Strategy, a plan designed to modernize California’s insurance market without dismantling Proposition 103, the voter-approved law that governs rate regulation.

Lara’s strategy focuses on three key reforms:

1. Expedited Rate Approvals

Insurance companies have long complained that California’s rate review process is too slow, often taking over a year. During that time, inflation, construction costs, and reinsurance rates can skyrocket — making approved rates obsolete before they even take effect.

Lara’s plan streamlines the review process, allowing insurers to respond faster to changing conditions while maintaining consumer oversight.

2. Allowing “Forward-Looking” Catastrophe Models

For decades, California law has prohibited insurers from using predictive catastrophe modeling to price risk — forcing them to rely on historical loss data instead.

That rule made sense in the 1980s, but in an era of climate change and megafires, it’s wildly outdated.

Lara’s reforms allow insurers to use these advanced models only if they agree to write more policies in wildfire-prone areas — a critical incentive for restoring availability.

3. Shoring Up the FAIR Plan

The state’s insurer of last resort has seen enrollment surge from about 100,000 policies in 2019 to nearly 400,000 in 2024. Lara’s plan strengthens solvency protections for the FAIR Plan to prevent a financial collapse that could shift costs to all policyholders.

A Crisis of Timing

While most experts — including Insurance Hour host Karl Susman — believe these reforms are essential, the problem is timing.

Placer County’s leaders argue that waiting until 2025 or later for results is simply not feasible for residents now losing coverage.

“Waiting for a year or two for more admitted carriers to come in is too long for some people,” the Board’s letter states.

That urgency is echoed by real estate agents, small business owners, and local officials who say the insurance crisis is stifling growth, hurting property values, and discouraging investment.

Without immediate relief, they warn, rural and suburban communities could face economic decline — a “slow-motion disaster” compounding the state’s housing challenges.

Why the Market Collapsed — and How It Might Recover

At its core, California’s insurance market is suffering from a mismatch between risk and regulation.

• Insurers face soaring costs from wildfires, construction inflation, and reinsurance.
• Proposition 103 requires state approval for rate increases — often a lengthy, adversarial process.
• Consumer advocacy groups can intervene in rate filings, further delaying approvals.

The result: insurers can’t charge rates that reflect today’s risk — so they stop offering coverage altogether.

The 2024 reforms aim to fix this by balancing data-driven pricing with consumer transparency. Allowing insurers to use catastrophe models, for example, helps them price future risk more accurately, while new disclosure requirements ensure homeowners can see how those rates are determined.

“Realistically,” one expert noted, “we should expect to see companies begin to re-enter the market, getting their toes a little bit wet, maybe in the first quarter.”

The Local Impact: When Insurance Becomes Unaffordable

In Placer County and similar regions, the human toll is already visible. Homeowners are:

• Paying double or triple for new coverage.
• Settling for limited FAIR Plan policies.
• Selling homes they can no longer insure.

For many, the crisis has blurred the line between financial hardship and physical risk. Homeowners who lose coverage are forced to choose between going uninsured or moving — an impossible decision for families who’ve lived in these communities for generations.

And because lenders require homeowners insurance, the issue also threatens mortgage eligibility and housing stability.

A Call for Recognition and Reward

Perhaps the most frustrating aspect for residents like those in Placer County is the lack of reward for doing the right thing.

California has encouraged “Firewise” communities and home hardening efforts for years, but most insurers don’t yet factor those improvements into pricing or renewals.

That’s something both the county and state agree must change.

“Those sorts of investments need to be recognized by the insurers,” one supervisor said.

Future regulations under Lara’s plan will likely include risk-reduction incentives, allowing homeowners who invest in mitigation — like clearing vegetation or replacing roofs — to earn premium discounts or preferential renewal status.

A Coordinated Statewide Effort

Despite local frustrations, both Governor Newsom’s office and the Department of Insurance emphasized that relief is coming.

In a statement to ABC10, the CDI reaffirmed its commitment to all counties:

“By the end of this year, the department will have enacted multiple regulations, administrative actions, and held public meetings to transform the insurance landscape, leading to more companies writing policies across all areas of our state.”

Meanwhile, the Governor’s office said it is “actively overhauling the insurance system on an accelerated timeline.”

These statements align with what Susman and other industry analysts have predicted on Insurance Hour: 2025 will likely mark the beginning of a new insurance era in California — one defined by transparency, flexibility, and shared responsibility.

Final Thoughts: From Emergency to Evolution

Placer County’s declaration is more than a cry for help — it’s a signal flare for the rest of California.

The insurance crisis is not confined to remote mountain towns; it’s spreading into suburban and even urban neighborhoods once considered low-risk.

The reforms underway are ambitious and overdue. But as county leaders remind us, the challenge is immediacy — bridging the gap between policy change and real-world relief.

“We’re hopeful,” one supervisor said. “But hope doesn’t pay premiums.”

California’s insurance future depends on balancing speed with sustainability — acting decisively to stabilize the market today, while building a system resilient enough to withstand tomorrow’s fires.

If that balance is struck, Placer County’s emergency call may someday be remembered not as a warning — but as the turning point that finally forced the Golden State to bring its insurance market back from the brink.