Calif. Proposes Agent/Broker Regs To Alleviate Under-Insurance
To alleviate concerns about homeowner under-insurance, the California Department of Insurance has informed Insurance Journal that it has scheduled a hearing for May 17 in Los Angeles to discuss proposed regulations governing standards and training for estimating replacement value on homeowners’ insurance.
According to CDI, the proposed regulations would:
The regulations would apply to fire and casualty broker-agents and personal lines broker-agents. The reason for proposing the regulations is to ensure that homeowners have more accurate replacement value estimates for their homes.
“The Department and the California Legislature received a significant number of complaints by homeowners who lost their residences in the Southern California wildfires of 2003. Since 2003, California has experienced significant wildfires in 2007 and 2008 leading to the loss of a high number of residential structures. After each of these fires, fire survivors complained about problems including their experience that after the fire they learned that the replacement value estimates made in setting coverage limits for their homes was too low, causing under-insurance issues to arise during efforts to rebuild or replace their residences,” according to Darrel Ng, CDI spokesman.
CDI believes that having an accurate estimated replacement value that is updated regularly is critical to preventing under-insurance. As a secondary benefit to the proposed regulations, new jobs may be created and business may increase for real estate appraisers and other entities that can assist the insurance industry with estimating replacement costs and construction costs of residential dwellings, the Department said.
“These new proposed regulations are substantially improved over previous discussion drafts, but additional clarification is needed to minimize the impact on broker-agents, and we will respectfully propose a number of amendments at next month’s hearing,” said Insurance Brokers and Agents of the West General Counsel Steve Young.
The hearing will be held at 300 South Spring St., Los Angeles, CA 90013. For information, contact Michael Tancredi, CDI senior staff counsel, at 213-346-6637. Comments on the regulations can be sent in advance of the hearing to the same address. For more information, visit http://www20.insurance.ca.gov/epubacc/REG/140872.htm.