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Residents invited to raise voices to Sacramento on insurance woes

 

Monday, March 4 (9:00 a.m.): The city of Walnut Creek is already adding its voice to ongoing conversations with elected and appointed leaders about finding solutions to the growing property insurance problems plaguing Rossmoor. Now, a Sacramento-based trade group is looking for denizens of Rossmoor nonprofit mutual benefit corporations (“Mutuals” in Rossmoor parlance) and other “common interest developments” in California to raise their own voices to Sacramento.

Rossmoor residents face a double whammy, in that they are affected not only by rising rates just like all homeowners, but also by the issues with the Rossmoor master policy not being insured to 100 percent of valuation.

On one of the pages on its website, the Community Associations Institute’s California Legislative Action Committee (https://caiclac.com/ current-campaigns/) is seeking homeowners’ personal stories of insurance-related challenges.

Such challenges include spiking premiums; insurance companies cutting back or dropping altogether property insurance coverage; insurers not issuing new policies or increasing existing ones; or – a situation hitting Rossmoor hard – would-be buyers into Rossmoor unable to secure a mortgage loan because GRF can’t obtain enough property insurance to cover all $2.659 billion valuation of Rossmoor’s structures and infrastructure.

Since late 2023, “We’ve gotten about 175 stories so far, and they are helpful in our discussions with the (state) Department of Insurance,” said Kimberly Lilley, the chair of the CAI-CLAC Insurance Task Force, which meets regularly with state Insurance Commissioner Ricardo Lara’s office about issues affecting common interest developments.

Elected officials, and officials from the Department of Insurance, seem to have gotten a better understanding of the pervasiveness of the insurance problems in California thanks to these submitted comments, Lilley said.

“They told regulators many more ZIP codes were affected than they thought,” Lilley said. “I think they have a better understanding now. Legislators are listening to us. The more people speak up, the more (those legislators) will be aware, especially as it relates to their own constituencies.”

Rossmoor General Manager Jeff Matheson agrees, and hopes residents take this opportunity to speak up.

“This crisis will require legislative action,” he said. “The bigger we can make the coalition … the better. By working with CAI, we build a larger and stronger coalition to encourage change.”

Meanwhile, the Walnut Creek City Council recently included the insurance issue in its 2024 State Legislative Agenda, which serves as the basis for its lobbying efforts in Sacramento.

Rossmoor has been able to obtain “master policy” insurance covering only about half the formal $2.659 billion valuation of Rossmoor. Though that level of insurance is enough to cover a 1-in-10,000year loss event, it isn’t enough for the the federal Fannie Mae and Freddie Mac programs to keep supporting new mortgages for Rossmoor home sales.

Thus, almost all recent home sales in Rossmoor have been cash-only. And Lilley noted that the all-cash requirement limits the potential number of buyers seeking a given property, typically resulting in lower sale prices.

Rossmoor isn’t alone in this situation, Lilley said; the Laguna Woods Village active seniors community in Southern California is among communities that haven’t been able to fully insure themselves and now can attract mostly cash-only buyers.

Herma Lichtenstein, chair of the GRF Insurance Task Force, said she hopes Rossmoor residents will take advantage of this platform.

“A good story is what gets elected officials excited, and I think more communities like ours will be gathering such stories.”

A question still to be addressed – whether GRF should curate a “Top 10” most compelling stories for legislators or lean on sheer volume of responses, potentially dozens of personal stories of insurance challenges, to carry the day.

What relief does Lilley think state regulators could offer beleaguered California residents, including those covered by a “master policy” like Rossmoor’s? One thing, she said, could be to be more flexible on some definitions of what insurance covers and how.

An example, she said, would be separate definitions for “fire” and “wildfire.” They should be two separate categories, Lilley said, but are generally considered the same for insurance purposes, even though wildfires usually cause much more damage than a kitchen fire or even a house fire.

Some companies won’t insure any kind of “fire” at all, she said. More flexibility in definitions, she said, could potentially attract some of the 18 insurance companies who’ve left California back into the state. That, she added, would mean more comprehensive policies being written, and probably some lower premiums, too.

GRF sponsored an insurance- focused town hall meeting last year, and Matheson said the plan is to do that again sometime this spring, hopefully with a few elected officials taking part. Lilley said she’s ready to lend CAI’s support in that effort.

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