Senator Ben Allen - S.B. 495 - Eliminate the List - – A New Law Could Change Everything!

Summary

The video covers an episode of Insurance Hour hosted by Karl Susman, featuring an interview with California State Senator Ben Allen about proposed insurance legislation. The main focus is on SB 495, known as the 'Eliminate the List Act,' which aims to remove the requirement for total loss victims to provide itemized lists of lost contents when filing insurance claims. Senator Allen explains how this legislation was inspired by constituents' struggles following recent wildfires in the Palisades and Altadena areas. The discussion also covers broader insurance industry challenges in California, including market sustainability, climate change impacts, and regulatory reforms. Senator Allen notes that while California remains the 10th least expensive insurance market nationally, the system is under strain with some carriers leaving the market. The conversation includes detailed exploration of potential insurance product innovations and the role of the Department of Insurance in balancing consumer protection with market viability.

Highlights

Introduction and Guest Background

Karl Susman introduces Senator Ben Allen, representing California's 24th Senate District since November 2014. Allen's background includes education from Harvard (BA), Cambridge (M.Phil), and UC Berkeley (JD), and he represents the West Side, Hollywood, and South Bay communities of LA.

Eliminate the List Act (SB 495) Introduction

Senator Allen introduces SB 495, explaining how it aims to eliminate the requirement for fire victims to provide itemized lists of lost contents when they've experienced total loss. He describes how many insurance companies are already voluntarily offering 100% contents coverage without requiring itemization.

Implementation Challenges and Industry Response

Discussion of potential retroactive application of the bill, with Senator Allen noting this aspect is still being determined due to complexities. The conversation covers how most insurance carriers have already stepped up to provide better coverage terms, often offering 70-80% upfront payments.

Insurance Market Challenges and Reforms

Exploration of broader insurance market issues in California, including rising costs, market sustainability, and the impact of climate change. Senator Allen discusses the need for reforms, including allowing predictive modeling for risk assessment rather than just historical data.

Consumer Protection and Market Solutions

Final segment focuses on potential solutions, including creating more insurance product options and better balancing consumer protection with market viability. Senator Allen provides his office contact number (310-414-8190) for constituents seeking assistance with insurance-related issues.

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Transcript

0:03

Buckle up, everyone. You are strapped in and ready for Insurance Hour. With me, your host, Karl Susman. Informing, educating, and entertaining one policy at a time, this is Insurance Hour. Hello, hello. This is Insurance Hour. I am your host, Karl Susman. Thank you so much for being here today. The phone lines are closed as we have a very special guest with us, Senator Ben Allen. I want to welcome you to the show. Thanks for being here. So nice to have you. So nice to be here. Good to see you, Karl. Just so everyone knows a little bit about Ben, I did take the time to do some digging so we're all familiar with the highlights. He has been in politics for a very long time. He is currently representing California's 24th Senate District, which encompasses the West Side, Hollywood, South Bay communities, and LA. He goes back into the Senate since November of 2014, so yes, we'll say he was doing it in his teens. Very involved in advocate for education, environmental sustainability, and the arts. Early life, born in Santa Monica, West Side Guy, product of local public schools like me. There you go. Don't hold it against us. And very academic, Bachelor of Arts, magnum cum laude from Harvard, Master of Philosophy in Latin American Studies from Cambridge, and Juris Doctor from UC Berkeley. So Ben, you know school. You know how to do it, right? I've been through it. I've been through it. And I appreciate you taking the time to be here. What we're going to be talking about today, as everyone is all of a sudden realizing legislation and laws and regulations that impact insurance, are a thing. People didn't used to pay a lot of attention, and now all of a sudden after these unreal wildfire events that we've had, people are starting to pay attention. And I noticed that you are looking to author a bill called, I guess it doesn't have a number assigned to it yet, so they're just calling it the Elimination. the List Act. Can you just start off, tell us, what is the Eliminate the List Act? Yeah, so I represent the Palisades. It's been so difficult. So many friends have lost their homes. And then I've been having, we've been having a number of town hall meetings with various levels of government to just have people come in and ask questions and get their, get all their questions answered, etc. So one of the many things that's come up is the fact that when people have gone to try to, they've lost everything, their homes are literally wiped out. And they're now being told by their insurance companies, these are the insurance companies that they've been paying for robust coverage, a lot of money for robust coverage for a long time, that they have to have an itemized list of all the items that they want reimbursement for. even though they have coverage up to a certain amount that they've been paying for. And it's a very difficult thing to deal with when you've lost everything, when you've lost your home. And the idea here is that we're gonna take away that requirement. We're gonna say, if you've lost your home entirely, we're not gonna make you go through that itemized list. By the way, a lot of insurance companies have just been voluntarily offering this as an option where they can just get up to the coverage of their home, the least for the lost items. But unfortunately, there are a few that are out there that have been just making people go through this process. If you think about all the challenges associated with losing your home, people are now having to, they've had to go through finding a new place, getting FEMA assistance, figuring out where they're gonna put their kids into a new school, possible business or job loss, childcare, getting new copies of all your vital documents. The last thing you need is to go through the re-traumatizing experience of itemizing out everything that you lost in your home, which you may not have a good record of. So this is all about just trying to make things a little bit easier for folks, and ultimately get them the coverage that they've been paying for all these years, just for this moment. To that extent, one question that comes to mind is, if this law goes through, everything goes according to plan, is this something that would be potentially retroactively effective, or would this be something going forward on policies? Yeah, so that's the thing that we're working out the weeds on. Obviously, retroactive would be great to help folks. It, of course, raises a whole bunch of complexities. So that's actually to be determined. Okay. We're working on it. We're certainly working on pushing the companies to step up and serve and basically offer this voluntarily. And as I say, a number of people have already done that. a number of the companies have already done that voluntarily. We'd like to see everyone do it, but as of now, I don't have a said answer for you because it, of course, replying it retroactively is more complicated, as you can imagine. For sure. Well, the Department of Insurance likes to do things like that, right? And we have insurance contracts that say you have to do X, Y, and Z, and sometimes post-loss. He will strongly recommend, I like that phrase, that carriers do it a little bit other than the way the contracts are written. So I can imagine that this would be potentially difficult to try and implement retroactively as well. But to your point, most carriers have really stepped up when it comes to this issue, especially since the Department of Insurance has come out and said, look, please step up regarding this issue, and let's not make it more difficult than it has to be for people. I know that there was a period of time in the beginning when the carriers were, I believe the contracts say they have to give. 30 or 40% of the amount of personal property up front. And they were, most of them were giving 70 or 80, then the Department of Insurance said, we'd like it to be 100. And from my understanding, with the dozen or so carriers that we're working with, pretty much everyone is stepping up and doing it so far. Yeah, that's right, that's right. I mean, and that's part of the push and pull here. We wanna make sure that people, that this will just be a part of standard practice going forward. And we know this is not unreasonable because as you say, lots and lots of companies have been stepping forward to offer the 100%. And so, listen, in the end of the day, it's to the insurance, I understand that payouts are expensive for insurance, of course they are. The flip side is, the whole system requires confidence. It requires people, if there are too many horror stories or people complaining about their experience, it reduces confidence in the system at large and makes people in other places less likely to want to pay for insurance or pay for more robust insurance. And so, the companies know that, and I think that's the push and pull here. Obviously, it's expensive for them after a moment like this and there's a lot of financial incentive for them to clam up and not give. But the flip side is, the whole system will collapse if there's an impression that the second, you pay all your life for insurance and the second there's a disaster, and then they make it really hard for you to get to collect on your policy. Absolutely, well being on the front line, I can tell you, it's a strange phenomenon that people, they're not huge insurance company fans. I don't know why it is, right? It's not become a doctor, a lawyer, or work for an insurance company when you're growing up. That doesn't seem to be the way people talk about it. I do wanna talk more about this bill and some more specifics about it and regulations. We're gonna take a quick break. When we come back, we are here with our special guest, Senator Benjamin Allen, who is here talking about his Eliminate the List Act. We're gonna talk about that and we're going to answer some questions that hopefully you will have as well. This is... Insurance Hour. I am your host, Karl Susman. 60 seconds is all, stand by, and we will be right back. Let's talk about earthquakes for a minute. Look, we know we live in earthquake country here in California. Powerful, devastating earthquakes have happened here before, and science says that they will happen again. They can't tell us exactly when. They can just tell us that it is going to happen. Count on it. Prepare for it. Did you know that earthquakes are not covered by your homeowners insurance policy? You need a separate policy to give you the peace of mind that you will be able to recover without getting financially wiped out the next time we get hit with a big one. There is a great company here in California that will provide you with earthquake coverage you need at a price you can afford. That company is GeoVera. I have a policy through GeoVera. I really like how easy it is to choose from all of their great coverage options backed by the financial strength that lets me know that they will be here for me when I need them the most. Go to getquake.com forward slash insurance hour to learn more. That's getquake.com slash insurance hour. Make sure you're ready for the day when the ground shakes again. Hello, hello. This is insurance hour. I am your host, Karl Susman. Thank you so much for being here today. Special thanks to our sponsor, GeoVera earthquake insurance company. If you are living anywhere in California, chances are you could use earthquake insurance. Check out insurance hour.com. You'll see the sponsor right there for GeoVera. I have had my insurance with them for many decades. I think it is worth you checking out GeoVera. We appreciate your support. We are here today with special guest Benjamin Allen. Senator, thank you again for being here. We are talking about this potential bill that you are working on. First, I want to ask if we keep calling it the Eliminate the List Act. Has a number been assigned? Is there a way people can reference this other than just by name? Yes, we actually have a number now. Ben, GeoVera, you got the number, don't you? Do we know? All these bills just got introduced last week and they were just assigned numbers. And I don't have the I haven't I haven't memorized all the numbers yet. So OK, we'll get it from because I know people are going to have questions and it's easier to reference a number. I apologize. I should know. But but it's OK. So no problem. So here we go. So SB 495, SB 495. SB 495. All right, we got it in real time. Well done. Can't wait on the East Coast. Good deal. Yeah. So one of the things that I wanted to ask you about it, because I know people are going to be wondering is, is this something that would potentially only come into play if there's a large enough event? Or is this something that we're looking to change the insurance code for in such a way that any time there's a loss care, the clients do not have to substantiate for personal property contents at all? No, we're focused on total loss situations. So we're focused on these kinds of situations that we saw. with the wildfires up in Palisades in Pasadena where literally people lost everything. It's much easier to itemize if you have only, the total loss situation is what we're addressing here. Okay, and total loss from a natural disaster like this, or just any type of total loss? I mean, anything that would be covered under your claim. Okay, I'm not trying to pin you down. I just want to make sure I've got it right. It's probably still to be determined also how that's going to come out. Total loss, and ultimately, yeah, for whatever would be covered under your policy. I mean, there are some policies, of course, that don't cover loss associated with mudslide, for example. But, and by the way, what we're doing right now is, if it's a mudslide caused that's directly related to the fire and you had fire insurance, then it will cover you. But the point being, obviously, if you're not covered for whatever disaster destroyed your house, this bill isn't relevant. Right, but if a kitchen fire, let's say, takes down it and becomes a total loss, that would potentially be something that would be covered or not? As long as it's covered under your policy, yes. I got you. Okay, so this isn't specifically something that you have to be suffering from a natural disaster or wildfire where thousands of people are out. If you have a total loss of a covered peril, then this would be something that would come into play. Exactly, exactly. Got it. That makes sense. Now, one of the things that the pushback that you might see from this in general is with insurance policies, the contracts, you have to do one of two things. You have to either show what you have up front and by coverage, or you have to justify it after the fact, one or the other. So if something like this were to go through, if a bill like this starts to happen, do you see there being the potential that carriers would say, all right, if we're not going to ask for documentation or proof on the back end, we need something on the front end? That's a good question. I guess I would say is I would rather that. I mean, it's much easier to collect on the front end than on the back end, but you've lost everything. Part of what we're trying to address here is just the madness of trying to pick up the pieces and the immediate aftermath of a fire and the need for resources to do it. That's a good question, but I guess I would say is if that were to be the shift, that would be a welcome shift because it's much easier to itemize on the front end and on the back end. I think we also get more of a realistic number. The industry has not done a great job in the past of coming up with that number of how much in personal property. It's normally just a percentage generated from the amount of coverage you have on the structure for your house, and that's pretty arbitrary. Totally. Some people have very little on their homes and some people have a ton in a smaller home. Yes, it's arbitrary. The idea being that if you're going to want to... purchase coverage, you're going to want to know you have that immediate payout. So if it turns out that in order to buy, let's just pick a round number $100,000 in personal property, you would then need to show, I don't snap pictures or give some type of a rough list. You know, I've got 25 grand in, you know, computers or I've got whatever the case may be, but you don't think that would be a potential problem that people would push back on to, you know, to have that guaranteed protection in the back end. Well, remember, this is a, this is a, this is an optional service that insurance companies provide. This is not typically something that's required for mortgage or anything like that. So this is a, this is, this is something when you go sit down with your insurance company that they offer as an add-on and you say, Hey, yeah, I do want to add this on. So, you know, in the end of the day, um, having, you know, I guess I, as a lawyer, I kind of like doing it on the front end when there's a more equitable relationship between the, the insurance company and the, and the, and the, and the client. as opposed to after the fact when they've literally lost everything and they're they're so vulnerable. So if you know if we're going to have this conversation about exactly what this covers, let's have it on the front end rather than after someone's lost everything. I think I think that makes a lot of sense. And as a broker, that's a conversation that's much easier for us to have with clients beforehand than after the fact. And there used to be a time not that many years ago where you didn't have a choice. You had a specific amount of personal property as a percentage period at the end. It was only several years ago where you were able to lower that number if you wanted to and to save money. But I think that like you're talking about now for it to be more of a conversation upfront where people can really decide what do they actually have, right? And what do they want to pay to have, to your point also, lenders do not require this. They are requiring fire insurance on their collateral, right? The home. But your stuff, definitely not part of that. Right. That's right. And then ultimately, then it's a truly free decision that you're making as a consumer. Is it worth it for me to pay the extra premium in order to have this assurance or not? Right. And have you, I want to talk a little bit after the break about what feedback you're getting in general, because it's interesting for me to try and get an idea of what are consumers saying, of course, if they've recently had a loss, they're probably really up for this idea versus what could potentially be the case if doing this might change the cost factor, right? Because that always gets into play. Whenever we change coverages or how they're paid out, it always affects the price and that always gets, that always gets us all itchy. But let's talk about that after the break. We are here again with special guest, Senator Benjamin Allen. We are talking all about, what's that bill number again? SB 495. SB 495, which we are going to call it by name at this point. And we're going to talk a little bit more about it after the break and answer your questions as well. This is insurance hour. I am your host, Karl Susman. We will be back in six. 60 seconds. Ladies and gentlemen, boys and girls, in just a few moments, the WindowtotheMagic podcast show will begin. My name is Patrick. My name is Calvin. I'm Mouseketeer Greg. My name is Paul and I will be your guide through the wonderful world of Disney sound experiences. This show is a weekly trip into the world of the Disney theme parks and resorts. And this is the place where you get to use your ears to surround yourself with the magic. For your safety, please remain seated while listening to the WindowtotheMagic.com Podcast. Maybe there's a name for this, something like Disnotic Obsession. Surround yourself with a package! please visit WindowtotheMagic.com for more information, or you can find us on Apple Podcasts and in the iHeartMedia app. Hello, hello, this is Insurance Hour. I am your host, Karl Susman. We do not have the phone lines open today, but I'll give you the number just for next time. That again is 559-656-0317. You could always call or text those numbers or send an email to Questions@InsuranceHour.com. We are here with our special guest, Senator Benjamin Allen. We are talking about SB495. Yep, that's correct. Did I get it right? All right, thank goodness. Okay, I should really write it down so I don't have to try and remember it, but that is the bill we're talking about. Hey, if you have questions about that bill and we're talking about it, send it in to us. We will get that over to the Senator and we will answer it on a future show. Now we're talking about the bill and I know people are dropping in and out, so give us a quick, again, brief summary. What is this bill designed to do and what made you decide that this is the right time to be doing it? Yeah, we just heard from so many of our constituents, people who suffered through the total loss of their homes and the Palisades fire and the Altadena fire, who were then, they're trying to find a new place to live, find a new place, school for their kids, childcare, figuring out all the things going on with their jobs. I mean, all the disarray associated with losing your house. And then, just to get the payout from the insurance company that they've been paying years and years and years for their personal belongings, they were then asked to produce an itemized list of all of the items that they wanted to get reimbursement for that they are claiming that they lost. Most, or at least many of the insurers said, you know what, that's crazy, we're just gonna pay you for 100% of your contents coverage without requiring the list. But there are, of course, some that don't do that. we're just asking for a change in policy and say look we got to just we let's eliminate this list after the fact as we discussed before if you want to have that conversation about a list beforehand fine that's then part of at least a an arm's length negotiation between the insurance company and the and the and the client but but but in the in the in the wake of total loss in disaster and emergency situation like this it's just it's just not a reasonable ask of people to to force them to go through this itemized list in order to get the coverage that they've been paying for for for a long time and so this is this basically takes away that requirement and asks the insurance companies to just offer a hundred percent of the contents coverage that these folks have been paying for without requiring an itemized list after the fact have you been getting calls from from people and talking about this issue specifically We have and I just I hear it's just a nightmare. I mean I was in a I mean I'll give you one example I was at a town hall not that long ago in Santa Monica lots of people came and I was just I was I was talking to a you know someone who lost their homes they lost everything and they just you know they they lost their they they they just don't they don't they don't have the wherewithal to to produce this list with proof associated with all their items and they were just talking about what an enormous hassle it was how hard it was while they were also trying to deal with getting you know FEMA and getting their documents replaced and getting their kid into a new school I mean it's just this massive number of challenges that they were facing and they were just talking about what a lousy process it was to to now be asked to to literally just list out everything they want reimbursement for and again these are things that they've been paying for the coverage for it's not just some giveaway this is a this is a service that they've been paying for oftentimes for many years so that in this terrible moment of need they'll have uh the the money the liquidity that they need to help compensate them um for for this loss remember FEMA just pays you like at least out the gates 750 bucks out the gates now you can get some additional assistance from them but FEMA only assists you beyond what you're for for things that your insurance is not already paying for and if they see that you've already got contents coverage they're not going to step in and help you on that so it's really up to the insurance company to help people uh you know and to actually kind of step up and and provide them with the coverage that they've been paying for and so this is just you know i know this was a story that i got directly i know my my office has been getting phone calls from members of the public but that that story really stuck with me quite frankly and i reached out to the insurance commissioner and said hey what can we do on this and that's how we we we started uh then that's how this bill started coming together that's right i think that's where i first saw mention of this was in a department of insurance uh announcement that of some legislation that was being worked on what is What is the general feeling when you're dealing with the California Department of Insurance? Because everyone is asking, everybody wants to know, who are they looking out for? Are they looking out for? Depending on who you ask, you can get a drastically different answer. What is your experience? Benjamin Allen, what do you feel if someone said to you, does this Department of Insurance, are they looking out for the consumer or for the companies, one over the other, if either? Oh, I mean, look, it is their job to look out for the consumer. It is their job to make sure that we have a robust, strong insurance market that helps people. Now, when I say something like that, that also presupposes that in order to help consumers, we have to have a strong insurance market and insurance system in the state. And so if we pursue policies that literally collapses the solvency and the viability of the entire insurance system, we won't be able to help anybody. And so, that's the tension, I think, that you see. But certainly at a moment like this, I've seen nothing but help from the insurance commissioner's office for members of the public. We've hosted several events with them. They've brought all the insurance companies and the fare plan to my district to allow for face-to-face, one-on-one meetings between impacted victims and their insurance carriers. Every time I get a request from a constituent, I pass it on directly to the insurance commissioner and nearly always it's been resolved pretty quickly. So he keeps saying, keeps sending me stuff, this is my job to do this, this is my job to do this. I know that some of the criticism that he's gotten has to do with some of the policy's positions that he's taken. He will argue, and this is a big debate and we can get into it if you want, he will argue that what he's been pursuing is been ultimately about trying to shore up the insurance market so that the whole thing doesn't collapse. There are some consumer groups that have been attacking him for taking the insurance industry's logic to heart too much. So that's where the, but his argument is, look, these insurance companies can pick up and leave anytime they want. This is a free market. These are not utilities. And a lot of them have been leaving. So that's the tension, I guess, that exists. But with regards to the current kind of advocacy for victims of the fires right now, I've had a very good experience with the insurance commissioner and insurance commission's office. And they've been helping a lot of people and it's not been easy. I mean, they've had a flood of claims, of course, and so if you're a constituent of mine and you've been having a challenge, please do reach out to our office. We'll get in touch with the insurance commissioner. Similarly, if you're in El Todina, go reach out to Senator Perez's office or. a Senate member of Harry Bedian's office, and they've got a similarly good working relationship with the insurance commissioner. We will be sure that we provide all of the contact information in show notes here for anyone that's listening and watching, so they have a way to find you. And then why don't we take a quick break? When we come back, let's dig in a little bit for fun and talk about a little bit of the controversy over some of these changes that have been going on in the insurance world. Insurance Hour with me, Karl Susman, special guest, Senator Ben Allen, be right back. Thanks for watching. I'll see you next week. Give us a call, or send a text to 310-820-5200, or visit us online at Susmaninsurance.com. Plus, stay updated on all things insurance by joining our text group. Just text 567-4Karl with a K. That's 567-367-5275 to get the latest updates straight to your phone. Susman Insurance, your family's insurance solution. Hello, hello. This is insurance hour. I am your host, Karl Susman. Thank you so much for being here today. We are continuing to chat with our special guest, Senator Ben Allen. Thank you so much for being here, Ben. I know that there's so much going on in the insurance world and so much legislation that's being talked about that has either pending or has occurred. Let's talk a little bit about what has happened recently. With all of the regulations that the Department of Insurance has been talking about and has implemented, for example, the Sustainable Insurance Strategy and all of those components, are there any parts of them that stick out to you as being either extremely critical or maybe you're a fan or not of? Well, look, I think we know we need to make some changes to the system. It's not working. The system is in danger of collapse. These fires are only going to put additional pressures on. One of the many things that's been discussed as part of all this is allowing insurance companies to use predictive modeling for risk and not just look at historical data. That's one thing that needs to change. I'm sure you know all about this. But the rules have been applied up until now have basically said you can only use historical data when predicting future. And we know with climate change getting so much more severe that that has to shift. So that's one of many things that we're talking about with regards to reforms that have to be made. Because, you know, at the end of the day, our climate is changing so dramatically. I mean, this fire that we just had in the Palisades is so catastrophic. I mean, I've lived in Santa Monica my whole life, and, you know, there was a bad fire out there in 1979, but nothing like this. Malibu certainly is burned a lot, but Palisades. So the point being, climate change is changing things in ways that we have to start to take into account when we're determining risk. So that's one of many changes I think that we need to make to the system. Do you think that – and I don't mean to – I'm not going to try and get you to take a position on black or white either way, but there are, as you can imagine, critics on both sides, right, that say that the Department of Insurance is doing too much, the Department is doing too little. I would argue, and I'm just curious where you fall on the spectrum, that – The system, it is failing. It's not that we're in danger of failing. The fact that if you pick up the phone and call 50 insurance companies or 50 brokers, and maybe three of them will have an option to give you a quote, that's probably a failure already in and of itself. What do you think? Oh, it's a massive problem. I mean, people need insurance. It's not just a peace of mind question. It's literally required under most mortgage systems. So if you want to buy a house, you got to have insurance. I mean, landlords typically have to have some form of insurance. So it's a requirement and it's becoming so expensive that it's really harming our ability to grow as a state. And the thing is, it's not just, because we've forced the socialization of the cost to some extent. So it's not just that people who go live in the highest risk areas pay high premiums, and they do. But everyone else is having to pay higher premiums now as well because of the socialization of the cost of insurance statewide and the fact that when there is a terrible fire and these massive payouts happen, you know, the insurance companies raise everybody's rates. And then just to add to all that, our utility rates have been going up because of fire liability. You know, the costs of firefighting within the state government, the local government. So a lot more of our government dollars are going to address all of these firefighting challenges. So that means less money is going to pay for schools or parks or senior services or transportation or whatever else. So we're feeling the pinch on a lot of levels. And it's certainly starting to harm basic questions of affordability in the state. So it's a very serious issue. And then, of course, we look at the solvency of the Fair Plan. I think we're all worried about that too. So, you know, so we've got to make reforms. I mean, I, you know, but we've also got to make reforms. reforms that put the consumer at the heart of the consumers have to be our key constituent here. That's the goal. That's the finish line for them. It's not about pretending that we can create a free system for them to get full coverage, but it's about creating a system that will offer the coverage that we need, that people, that real people need at an affordable price. Now, easier said than done. We're struggling to do that, but that's got to be our north star as we work on a reform package. What do you mean when you say the socialization of insurance? I know what that means to me, but for people that are listening, what does that mean to you? How do you see that as having happened? When we require insurance companies to cover everyone in the state or at least to a certain amount? Um, you know, because it's expensive to ensure people in very high virus zones, uh, that, you know, in order to do business in the state, and, and, and, you know, you're, you're covering that risk in those very high virus zones, you end up, you end up charging everyone a little bit more, you may charge them a lot more, but because, so, so, but so as to not have to charge them rates that are so exorbitant that no one can afford them, you end up having to raise everybody's rates across the board. And that's, that's, that's to some extent what we've seen. And part of it's a tough thing for me to grapple with, because I've got, you know, people in my district who live in very high virus zones, but the vast majority of my constituents, quite frankly, don't. And, you know, there's an equity question here as to whether we should be charging everyone more for this broader, uh, liability risk that we all have. Now, of course, we, you know, we socialize costs, you know, by that, I mean, we spread out the cost of all sorts of things, uh, uh, you know, and then we, we all look out for each other and that's an important part of living in a, in a society. But, um, uh, but, but there, there's a point at which the costs and the risks are so high for some properties. It raises equity questions as to, as to how much are we going to make everyone pay for it? Right. The way, the way I like to look at it is, you know, it's, it's one thing if someone is paying more in an area that's a higher risk, but it shouldn't be close to someone that's living in the city. And I think, and I'm born and raised in California, so I, I can say that the good, the bad, the ugly, right? And we like things to be homogenous, right? We like things to be fair. That's a California, you know, value. And I think there's always been a challenge between being able to keep everybody insured while at the same time, not quote unquote penalizing someone that wants to live in a, in the area that's a very high risk. So the person that's not in that area does tend to be paying more than they would have otherwise been paying to, to sort of subsidize that. I want to talk a little bit more about that after this break. And I want to talk and see about some potential ideas that you see that might be coming down the line, either from your office or from others that are, that are working up north for us in Sacramento. This is insurance hour. I am Karl Susman with special guest, Benjamin Allen. Thank you so much for being here. 60 seconds. We'll be right back. Stand by. Ladies and gentlemen, boys and girls, in just a few moments, the WindowtotheMagic podcast show will begin. My name is Patrick. My name is Calvin. I'm Mouseketeer Greg. My name is Paul and I will be your guide through the wonderful world of Disney sound experiences. This show is a weekly trip into the world of the Disney theme parks and resorts, and this is the place where you get to use your ears to surround yourself with the magic. For your safety, please remain seated while listening to the WindowtotheMagic.com podcast. Maybe there's a name for this, something like Disnotic Obsession. Please visit WindowToTheMagic.com for more information, or you can find us on Apple podcasts and in the iHeartMedia app. Hello. Hello. This is Insurance Hour. I am your host, Karl Susman, here with special guest, Senator Ben Allen. Thank you for being here, Ben. We were talking a little bit about some of these new laws, new restrictions, new guidelines. Call them what you like. What do you hear? What do you see? What do you think we might be seeing down the line when it comes to regulations and just the insurance market and viability in California? I mean, ultimately, this is all about how we find a way to protect consumers while also ensuring that we have a strong market here in the state, a strong insurance market here in the state. And that's the challenge. As we were discussing before, there is a, you know, Prop 103 has actually kept prices pretty low. And we were talking about how California is the 10th less, least expensive insurance market. in the country. So kudos to Prop 103 and the authors of Prop 103 for forcing a system that has actually kept prices down compared to where they might be otherwise. So that's a good thing. The flip side is the system is really starting to strain in a very serious way. And of course, it depends on who you talk to and some of the consumer advocates will say that the insurance industry is crying wolf. It's hard to evaluate it all, but we certainly have some insurance companies that are leaving or not writing policies and that's becoming a big problem. So ultimately it comes down to crafting a system that's gonna work. I think as I say, on a going forward basis, allowing for predictive climate change, incorporating models for thinking about risk. I also think that maybe what we need to do, and this is something we have to work with the federal government on with the lenders, is really create more products and more options. and really have the most bare bones as a requirement and then let people, as a requirement for lending, and then let people go from there in terms of what they want, not require too much. And then just let people make their decisions based on their own level of comfort relating to, you know, to risk, their own risk comfort. Their own risk tolerance, right. I mean, one possible product would be, let me just put out an idea, is to let a consumer pay a little bit extra for a company that then pays the mortgage provider some extra money so that the person doesn't get insured. And that may be a product that someone wants. Again, not something that I love the fact that I'm even having to think about this because it's not good for us to have an underinsured or uninsured population, but given how much things are starting to strain, it may be that people who, you know, decide to go live in the very high virus zones should be given the right to take the risk of losing everything. A really hard thing to say, by the way, I don't love saying this, but that may be where we're going. But that may be a useful product that ought to exist on the market that currently doesn't. Well, consumer choice is what I'm all about. You know, everyone always asks me, where do I fall, am I a consumer person or am I a company person? And I say, all my job is, is finding insurance for consumers. That's all that matters to me. Whatever furthers my ability to have markets to place clients, that's what I want to do. And what's interesting about what you're saying is those are two types of products. One, and this is the irony of it, they exist. There's something that's called a DP1, which is a Dwelling Fire 1 standard form, which... which is similar to the California Fairplants, just fire. But you're not going to find a carrier in California offering it. And if you ask why, they'll tell you because it's not something that the regulatory agencies would approve. Arguable, I don't know. I don't think they've tried either, but that's probably the case. Now, as far as paying something to the lender, what some people have experienced, not that they wanted to, is forced insurance. Now, that happens when you don't have an insurance policy for fire coverage only, since that's all the lenders can require. Incidentally, they can't require earthquake insurance, which I always thought was odd, but they can't. So if you can't find, or for whatever reason, don't purchase fire insurance, then your lender will put a forced policy on. The problem is, and this is what people are finding out, the handful that have done it, forced insurance policies are basically insurance policies, ironically, again, that in the background, pay the lender the outstanding debt of your mortgage. But they don't rebuild the house. It has nothing to do with the house. So the consumer has the benefit of no mortgage and the benefit of no house. So you're not paying more for them to write a lot more, a lot more. Yeah. So I understand that there could definitely be some kind of an in between somewhere. I like your thinking that maybe there's a way, again, without one group of people subsidizing the other. Right. We're trying to separate the risks better between the people that are, you know, in the high canyons versus people that are in the flats in the city. And for people that do decide to live in those areas to have more options, because truly right now they don't. Yeah. And I wonder, right. I mean, is there is there could you so is there a way that as a consumer you could buy the consumer facing equivalent of forced insurance? Not that I'm aware of, but it would be very expensive. The lenders are paying. They're already paying for it through the forced insurance. Right. Right. So, you know, so so presumably there'd be there could be a market for at least a less expensive version of it, because if you think about it, why would it why would it necessarily be so much more expensive if it only covers a basic if it only covers kind of a basic liability for the mortgage or it doesn't take care of the of the of the of the home buyer, you're you're you're basically limiting the amount of liability. And so that should cost less. And it's a decreasing exposure as the mortgage slowly gets paid down. Exactly. Exactly. Yeah. It's it's an interesting concept. I think what happens the problem that I've that I've seen with it is lack of understanding, because people would say, oh, I'll just get forced insurance and then there's a loss. And they say, what do you mean? I thought I had forced insurance. Why aren't you rebuilding my house? And and you have to have that difficult conversation. Fortunately, we don't because they're not. That means they haven't purchased insurance. But the lenders are sending out these letters that say, well, yes, thank you. Your obligations are now. you know, closed, you don't owe us any more money, have a nice day, and where are they supposed to live? Where do they go from there? It's truly a tragedy, but I agree that there should definitely be a place to have more creative and customizable options out there for consumers, and we don't have that right now. Yep, yep, yep. Yeah, I love to, I mean, if you have ideas, I love to work on this. I mean, I think so much of this is, at least on the mortgage, on the lending side, is federal in nature, so there's limits to what we can do, but if there's any way that I, you know, I'd love to work with you on this, because I think in the end of the day, you're right. We need to just offer more options to people given how the markets become. More options also create competition, which inevitably is going to lower the rate for everybody. Listen, we have one more segment. I want to talk again one more time about the LIST Act. We'll be right back. This is Insurance Hour. I'm Karl Susman with special guest, Senator Ben Allen. Be right back. Thank you. Thank you. Thank you. Are you feeling lost in the search for the right insurance? Making call after call, only to find no one willing to go that extra mile for you? At Susman Insurance Agency, we understand that frustration, and we're here to change your experience. Where others see obstacles, we see opportunities. While many might shy away from jumping through hoops, at Susman Insurance Agency, we are prepared to leap. Visit us online at Susmaninsurance.com or email sales at Susmaninsurance.com. Let's uncover the insurance solutions you deserve. Susman Insurance Agency, going the extra mile every time. What is it going to do for us? Yeah, it basically says that when you suffer total loss as part of an emergency of your home, you don't have to fill out an itemized list just to get the insurance coverage, the contents coverage for your insurance that you've been paying for, for the items within your home. We've been hearing about this problem from many, many constituents. After you lose your home, it's an incredibly difficult moment where your whole life is up in the air. And we're just trying to say to the insurance industry, hey, offer 100% coverage of the contents that the people paid for when they've lost everything. They paid for this. We know they've lost everything. This is not one of these things where maybe part of their house has been destroyed. So there's some ambiguity. They've lost everything. You ought to pay for the coverage that that person has been paying for for a long time. And that's what this is about. At the end of the day, a lot of insurance industry players have actually already offered 100% coverage through the current, right now. to Palisades and Altadena fire victims. This would, on a going forward basis, make that just standard practice around the state of California. Do you think that the industry, and I'm saying industry loosely, the carriers that are stepping up and already paying 100% are going to care if this regulation goes into effect, or are they going to look at it like, oh my gosh, more regulation, or are they going to look at it and say, well, we're doing it anyway, it doesn't really affect us? Yeah, I think what we find, this is not my first, it's my 11th year in the legislature, so I've seen how this thing works. In fact, what ends up happening is that when we codify a standard practice in industry, what it really does is benefit the people that are already doing the right thing. They like it because it means that, because they already have it built into their business model, so it's not changing their practice. And what it does is it, It makes everyone else now comply, and so now you don't have some other companies that are kind of, from their perspective, giving the industry a bad name by not offering this service and by maybe offering cheaper service because they basically undercut people and they end up niggling and diving people at the end. So it actually enhances the competitive advantages of the companies that have already been doing the right thing. You see this in environmental law a lot, too. So when a car company that's been producing much more environmentally friendly cars, when you have a rule that now requires higher pollution standards, that company's rejoicing because they've already met the standard. And it just means that their competition is going to have to rework their model to comply, and they can just keep flying because they're already pursuing a business model that's now going to be required across the board. So it creates the playing field that we all want, and then it levels it out where everybody has to meet that minimum requirement. 100%. I think that's something that most carriers, to your point, are going to be happy to see because they are already doing the right thing. Even some of the smaller carriers, we call them regional carriers in California, have been feeling the pressure from the Department of Insurance in doing this. But I don't see, based on the way you're describing it, I don't see this as being something that carriers would necessarily have pushback since, like you said, they're already doing it. Have you had any contact with any of the top 10 carriers in California? Is there opinion floating around on this at all? Yeah, I mean, a little, very, very preliminary, getting massive pushback at this point. I'm sure there will be input and thoughts and tweaks as we move along. But again, because so many of them are already doing it, I don't think this is going to be the hardest of the various fire-related bills to make its way through. But we will get some pushback, no question about it. But the benefit we'll have is to be able to point to those that have already been doing the right thing and offering 100% contents coverage as we make our way through the legislative process. And you're right. Some people are going to call this micromanaging or kind of interfering with the contract, saying that maybe threatening that it will just make the upfront negotiation a little more complicated. Again, from my perspective, bring it on. I'd rather have that conversation before the fire when you're sitting in an office and you've got, you know, when the leverage is more equal. Sitting in an office. Do you think people walk into offices to buy insurance anymore? Come on. Yeah. So how does it happen? I guess it's, you know, where are you? We're very lucky if we can get them on a video chat to have that conversation. A lot of times people are very, I would say post pandemic, everything is very transactional. We have to push hard to try and actually have an educational conversation. I wish, I wish it were different and maybe it will be. because now insurance is not going to be such a commodity that people see, they're going to see that there are major differences between products. Yeah, yeah. Well, and it's interesting, maybe this, I mean, the other thing I'll say is that, at least when I've been sold on thing, now that I've been a lawmaker for a while, it's funny to get, in various salesperson context, I just bought a car, for example, it's funny to then have the salespeople offer you something that you know is actually, they're required to offer you by law. But that's good, right? I mean, at the end of the day, now insurance brokers will say, look, no questions asked, you'll have 100% contents coverage if you buy this product. If God forbid, you lose everything in a fire. I hear you. Senator, I appreciate you spending time with us here today. It's been unbelievably interesting, and I can't wait to follow this bill as it goes along. Why don't you give us contact information? If people want to reach out to you directly, what's the best way? Yeah, our district office is, what, 310-9-1. What is it? Oh my gosh, this is too funny. You never call yourself. Nobody knows their own cell phone number. That's okay. No, no, no, it's exactly. I'm always, we have my card here. So yeah, it's 310-318-6994. 310-318-6994. Please do call our office. If you have any questions, we've been helping literally thousands of people through this terrible, terrible situation. And I've got one other number for you too that, oh yeah, whoops, here we go. Here's another number you can call. 310-414-8190. This is actually the best one. 310-414-8190. Please don't hesitate to call us. We've got a wonderful team in Los Angeles and another great team up in Sacramento, and they spend a lot of time helping people, especially right now, given all these terrible fires that we've experienced. If you also have suggestions or ideas or things you want to work with us on, I mean, as I say, this bill came out of constituency. concerns. And so oftentimes our bills come out of just meeting real needs that are out there in our community. And so we just encourage people to reach out and seek help. Seek help. I mean, one thing I will say, I had very little experience with serious fires as a policymaker before this fire, because I didn't use to represent Malibu. You know, there actually are a lot of mechanisms in place to help people from the federal government, from FEMA to the Small Business Administration, all the way over to CalRecycle and the Army Corps and, you know, local government options that are out there for people. There actually is a lot of help out there, but it's oftentimes really difficult, especially when you face a major disaster like this, to know where to start. And so please do seek out help. There is assistance. We know you need help, and we're anxious to help you. Senator, thank you so much. And we will make sure we have these phone numbers available for everyone as well if they If they forget them, go ahead, they can always reach out to us and we'll be sure to forward them on as well. Everyone again, this is Senator Benjamin Allen. Thank you so much for being here with us today on Insurance Hour. Thank you, thank you so much. I do want to thank all of you for taking the time to listen today. I know insurance is not necessarily the most sexy concept. It is important that you understand what it is you're looking for, what it is you think you're getting, and finally, what you actually did purchase. You simply need to know more than you used to. Things are more complicated. If you have any questions, please reach out to me directly at 559-656-0317. You may also send your questions to Questions@InsuranceHour.com. Informing, educating, and entertaining one policy at a time, this is Insurance Hour. The show is dedicated to Shamrock Papa.