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Packed town hall seeks solutions to property insurance crisis

State Sen. Glazer says climate change is root of problem that has hit home in Rossmoor

By Sam Richards

Staff writer

Friday, April 12 (2:00 p.m.): There is no free lunch as far as property insurance is concerned, and Rossmoor – as an entity, and as individual homeowners – is feeling the inevitable effects of too many catastrophes around the world needing to be covered.


At an April 12 “Property Insurance Crisis” town hall meeting at the Event Center, state Sen. Steve Glazer said the root of the problem is simple but neither surprising nor new. California wildfires, which have gotten worse over time, have destroyed more than 39,000 homes in recent years, he said.


“Climate change is changing everything, and the consequences of it are there for everyone to see,” Glazer, D-Orinda, told approximately 450 people at the Event Center, and another 320 or so over Zoom.


In Rossmoor’s case, those consequences include the inability of GRF to get enough master-policy insurance coverage to fully insure 22 Mutuals’ structures and the GRF common public buildings, and for some individual residents to be abandoned by their insurance carriers.


Glazer told Friday’s audience there are some potential legislative solutions being developed aimed at insurance companies, including state Assembly Bill 478, introduced by Damon Connolly, D-San Rafael, which would protect seniors from losing their home insurance policies because of the increasing risk of wildfires.


But as several speakers pointed out Friday, the insurance industry is a business that can’t operate sustainably without making money. So, Glazer and others said the most tangible ways to make insurance cheaper and/or easier to get at all includes making properties less susceptible to wildfire. In Rossmoor, such “hardening” measures have included Firewise recommendations for use of noncombustible construction materials, decorations and mulch materials near structures, removing dead vegetation from near structures.


The main insurance-related problem for Rossmoor/GRF as an entity is that its master insurance policy covering more than 6,300 homes provides only 43% of the appraised $2.6 billion replacement value should a disaster destroy everything in the community.


Michael Gallagher, an area president with A.J. Gallagher, the insurance brokerage firm whose agents obtain Rossmoor’s insurance coverage from varied sources, said many “common interest developments” in California like Rossmoor are facing similar problems. While the coverage Gallagher has been able to assemble is enough to cover a 1-in-10,000-year loss event, it isn’t “full replacement value coverage.”


Julia Juarez, deputy commissioner for community relations and outreach for the state Department of Insurance, told Friday’s audience via Zoom that increasing costs for construction supplies for rebuilding, and labor shortages – in addition to the increasing number of catastrophic events – are also driving up costs, for insurance companies and, ultimately, consumers.


Some insurance providers, Michael Gallagher said, are wary of the prospect of insuring $2.6 billion worth of wood-frame buildings concentrated in a small geographic area. On the flip side, he said several key insurance providers have visited Rossmoor in person recently, noting both the large golf course in the valley (great firebreak) and better general fire-resistant conditions than they anticipated.


“It’s really, really important for (the insurers) to see that the community has a lot of fire-prevention protocols put into place,” Gallagher said.


Still, the federal programs Fannie Mae and Freddie Mac, which guarantee most of the mortgages made in the United States, have noted the lack of full replacement value coverage and have thus deemed Rossmoor as “unwarrantable,” too risky a property to finance. This situation can leave current owners unable to secure reverse mortgages; new owners unable to secure mortgages (requiring them to pay cash); and can lower property values.


Matheson and other GRF officials have met with Glazer and several other local and regional elected leaders in recent months to discuss possible legislative solutions to the insurance problem, and the city of Walnut Creek has included the insurance issue (and Rossmoor’s situation specifically) in its 2024 State Legislative Agenda.


Juarez said the Insurance Commissioner’s office plans to have the multiple components of the California Sustainable Insurance Strategy in place by the end of this year. These include requiring insurance companies to insure at least 85% of policies in “at-risk” areas; requiring insurance companies to factor “hardening” measures into calculating premiums, figuring to make them cheaper; and shielding Californians from helping pay for disasters in other parts of the world.


Juarez also encouraged individual households who’ve had rates increased by their providers or who have been dropped altogether to find new companies, including those not necessarily near home. A Bay Area resident, she said, can seek out insurance providers based in Los Angeles or San Diego, for instance, and that may yield good results.


The top 12 insurance companies operating in California, Juarez said, provide 85% of the state’s insurance coverage. But it’s some of those companies, she added, that have been most aggressive about pausing writing new policies or canceling existing ones.


“One hundred and eleven companies have written policies in California; and 30 to 40 of them are still writing new policies,” she said.


This town hall meeting will be aired on Rossmoor TV on Thursday, April 18, 7 p.m.; Friday, April 19, noon; Saturday, April 20, 5 p.m.; Sunday, April 21, 10 a.m.; Monday, April 22, 3 p.m.; Tuesday, April 23, 7 p.m.; and Wednesday, April 24, 7 p.m.