San Mateo County: Insurance market warrants state of emergency

Homeowners and businesses are losing insurance or facing costs are alarming rates that force many to close shop, Mueller said. While some look elsewhere for coverage, many are choosing to go without insurance altogether and risk losing everything. 

Amid high rate increases or insurance companies leaving the state, Mueller said the issue warrants a declared state of emergency. 

“The ripple effects in our economy are already being felt in the housing market, where it has the potential to slow or halt real estate transactions and development, particularly of affordable housing,” Mueller said.

When homeowners or businesses lose their insurance, they’re tasked with finding a new carrier, or to go into the state’s last resort — the California Fair Access to Insurance Requirements Plan.   

However, these premiums can double or triple previous rates and only cover losses due to fire, Mueller said. 

The California FAIR Plan was established to provide coverage to homeowners in particularly high-risk areas. San Mateo County’s retired fire marshal Denise Enea said this has been an “epidemic” in the county for a long time. 

“Insurance nonrenewals, at this point, are a crisis for homeowners,” Enea said. “Any residents west of Alameda de las Pulgas are facing these issues.” 

Housing along the coast often does not comply with certain mandates of insurance companies because they are older, Enea said. Enea is also the executive director of FIRE SAFE San Mateo County, a nonprofit that looks to maintain and protect quality of life for residents living in high-risk fire areas. 

In addition to noncompliant structures, climate change has led to increasingly devastating weather events in California, including the 2020 CZU Lightening Complex Fire that consumed more than 80,000 acres of land and the 2023 winter storms that led to the destruction of private and public property, according to the staff report. 

Many established insurance companies are leaving California to avoid the risk, Enea said. 

“This reduction of available homeowner insurance coverage from the conventional provider insurance market has caused increasing enrollment in the FAIR Plan, threatening the ongoing stability of the state-established risk pool,” the staff report read. 

State Farm, the largest insurance carrier in California, declared it would no longer include insurance coverage for fire risk “which is perhaps the most important component of a homeowner’s coverage,” the staff report said. 

FIRE SAFE has received numerous requests for help in attaining insurance, Enea said, primarily from residents in the more rural areas. The nonprofit also teaches residents about how to integrate defensible space in their homes, such as fire safe landscaping.

“[We are] seeking grants for homeowners in these areas for them to retrofit or attain funds to bring their houses up to an ignition-resistant state, which is really the only way that in the future they’re going to be able to attain insurance,” Enea said. 

The California Insurance Commission released draft regulations to address these market concerns, however, the reforms would not go into effect until at least 2026, Mueller said.

Other counties, such as San Bernardino and Shasta, have passed similar measures. The urge for support from the governor and action by the Legislature adds to hope the urgency needed is demonstrated.

“We all understand that this is a state issue, and that’s why this resolution is so important. This resolution will definitely help the insurance commissioner be more proactive in dealing with this matter,” Enea said. 

The resolution passed unanimously, with board President Warren Slocum absent. 

In other business, limited access to affordable child care is a primary cause for the inequality women face, according to a report by the Commission on the Status of Women. The report advised the board to establish an Office of Women and Children to coordinate efforts related to child care, pay equity and financial literacy. 

In addition, a shortage of 2,829 early educators and more than 17,00 child care spaces prompted the commission to also request the board to create a “Blueprint for Child Care in San Mateo County” to fill those gaps.