With 15,000 Santa Cruz County homeowners being ‘non-renewed’ for insurance, anxieties grow as plans are hatched in Sacramento

When Scotts Valley Vice Mayor Derek Timm asked a crowd of about 100 how many had been dropped by their insurance or otherwise not renewed, nearly every audience member raised a hand. The crowd had assembled Tuesday evening for a forum at the Scotts Valley Community Theater, as notice of “non-renewal” of homeowners insurance policies swept through the area. 

That issue of Santa Cruz County homeowners at risk of losing their insurance as companies move to not renew annual policies has reached a major dimension. More than one in seven homeowners in the county are in the process of being non-renewed, Richie Sayavong, an analyst with the California Department of Insurance, told Lookout. Sayavong, who spoke at Tuesday’s forum after earlier addressing county supervisors, said there are 15,000 homeowners in the county – which encompasses 107,124 housing units, according to the most recent U.S. Census report – who are in the process of non-renewal.

The issue is apparently mushrooming, both here and nationally. Here, most recently, State Farm Insurance notified about 4,300 Santa Cruz County residents that the company would not renew their home insurance policies. That’s part of a greater statewide cut, as the company indicated it would not renew policies for around 30,000 individual homeowners, as well as commercial policies covering 42,000 apartment buildings. State Farm, Allstate, Farmers and Nationwide all have moved to limit new policies or pause them altogether for people in “high-risk” areas across California.

Nationally, The New York Times has just published a series on the climate change-driven insurance losses piling up across the country.

The City of Scotts Valley hosted the forum, which focused both on fire preparedness and insurance issues. The first 45 minutes saw Scotts Valley Fire Department Battalion Chief Chris Stubendorff, Cal Fire Inspector Andrew Clark and Firewise coach Sally Mack tell residents the ways they can mitigate fire risk to their homes and prepare for natural disasters. 

The insurance forum followed, Sayavong starting off with a presentation on the current state of home insurance and his agency’s work on it. While Sayavong did not take questions directly from the audience, members wrote questions on notecards that city staff collected and handed to moderator Timm so he could incorporate them into the panel discussion.

Then, United Policyholders program specialist and former state chief deputy commissioner Joel Laucher, Cassidy Insurance Agency’s Edan Cassidy and Kami Cady and Keller Williams Realty agent Maggie Barr joined in the panel discussion. After the forum, attendees congregated outside the auditorium, where fire department personnel and the panelists took questions from concerned residents.

Sayavong’s agency, the California Insurance Commissioner’s office, is at the center of the growing controversy. It oversees and directs the functions of the Department of Insurance, and licenses, regulates and examines insurance companies.

Before the evening forum, Sayavong had given the same presentation to the county board of supervisors. There he was met with a number of questions, and heard from the supervisors what they were hearing from their constituents.

“The community is scared, frustrated and doesn’t know where to turn,” District 2 County Supervisor Zach Friend told Sayavong at the meeting. 

“This is a major problem, and people getting dropped while trying to rebuild their homes is very concerning,” added District 3 County Supervisor Justin Cummings, speaking to complex post-CZU fires, post-flooding rebuilding efforts.

Sayavong said a “historic agreement” between the Department of Insurance and major insurance companies seeks to remedy the issues. Sayavong said State Insurance Commissioner Ricardo Lara aims to implement a set of executive actions by December, which he outlined at the forum. Overall, he called it a “sustainable insurance strategy.” 

Those actions include:

• Requiring insurance companies to write no less than 85% of their statewide market share in high-wildfire-risk communities. That means that if a company writes 20 out of 100 homes statewide on average, it will be required to write 17 out of 100 homes in a high-risk community. Sayavong said that Lara will use a “data-driven approach” to identify those communities. He noted that there is an insurer ready to write policies in distressed areas should the state’s Office of Administrative Law approve the reforms.
• Moving homeowners currently on the state-driven FAIR Plan back to the traditional market, prioritizing those following the state’s “Safer from Wildfires” framework — a list of expert-endorsed actions meant to keep people safe and reduce risk for property owners. The FAIR Plan, meant for homeowners in “high-risk” areas of California who can’t secure private insurance coverage, has been considered a limited option. But now, many homeowners have found it to be their only choice in the current market, leaving them with an expensive insurance option that covers less than even the most common homeowners’ insurance policy.
• Expanding FAIR Plan commercial coverage limits to $20 million per structure for homeowners associations, affordable housing and infill developments — facilities built on previously unused or underutilized land within otherwise developed areas. Sayavong said this will help close the gaps for these kinds of developments, “which have also been having a hard time finding coverage.”

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