SACRAMENTO, California — California’s Insurance Department will allow property insurers in the state to pass along the costs of reinsurance to customers if they meet a quota of policies in disaster-prone areas under a new regulation finalized on Monday.
The regulation, which is likely to increase premiums, marks the final part of Insurance Commissioner Ricardo Lara’s multi-pronged effort to entice property insurers back to the state after historic losses.
Major property insurers like State Farm and Allstate have fled the state’s market in the past couple of years, leaving hundreds of thousands of residents with no option but to go to the dangerously bloated insurer of last resort.
Property insurers have long asked California’s Insurance Department to allow them to include the costs of reinsurance, which global companies not subject to state regulations provide as insurance for insurance companies, in their rates. The practice is allowed in all other states.
