SONOMA COUNTY, CA — With around 9,000 houses in Rohnert Park, if the property value goes down by 12 percent on each home when they receive their non-renewal letters from their home insurance companies, the city will lose over $900 million in property values.
Rohnert Park Mayor Susan Hollingsworth Adams was painting a picture of the effect of insurance companies increasingly pulling out of disaster-prone housing markets such as Sonoma and Napa counties, leaving homeowners and builders uninsured and stalling the economy.
"That is a devastating blow to Rohnert Park and I know it is that way throughout the [North Bay] Congressional districts," said Adams, who owns a wholesale insurance brokerage and was among a handful of industry experts and local officials who spoke at a press conference Thursday afternoon about new bi-partisan federal legislation aimed at bringing insurance providers back to California.
Allstate stopped writing new home, condo and commercial policies in the Golden State in 2022. Farmers Direct Property and Casualty Insurance Co. stopped issuing new policies as of Sept. 15, 2023 in California. Last month, State Farm announced it would discontinue coverage or 72,000 houses and apartments this summer in California with the bulk of impacted ZIP codes in the Bay Area. These are just a few examples of insurers leaving the state or limiting policies in the past couple of years.
"There is an old saying: big ships don't turn on a dime," Adams said. "The California insurance crisis is a very big ship and the bill that Congressman Thompson is putting forward can pick that ship up and turn it around and face it forward. It is a huge step for the insurance-buying public in California which is every single one of us."
U.S. Rep. Mike Thompson and U.S. Rep. Jared Huffman, who together represent Sonoma County, held the press conference in Coffey Park, the Santa Rosa neighborhood where nearly seven years ago, they committed to Tubbs Fire victims that they would stick by them.
"This is a big, big problem throughout the state of California and for us representing Sonoma County, it is really a part of a commitment we made seven years ago when the Tubbs Fire was still burning," Huffman said. "We were meeting with traumatized homeowners and we promised we would be there for them ... and that has taken some interesting turns ... Now we come to a new problem — and it sort of feels like one disaster on top of another — when insurance is too expensive to afford and in many cases, homeowners can't even find it — as insurance companies are pulling up and leaving parts of the state and in some cases the entire state."
Thompson agreed the insurance crisis is a devastating problem.
"The impact we are experiencing because of the insurance companies pulling out of California or failing or refusing to write policies for certain parts of California is devastating," Thompson said.
People have to have insurance to buy a home or sell a home, Thompson said, and although insurance is regulated on the state level, he started looking for something that could be done at the federal level. That is when he learned of successful legislation in another state with its share of natural disasters: Alabama.
"It wasn't rocket science but it is a proven program put in place in Alabama where homeowners were provided grants to make their homes even more disaster resilient," Thompson said. "And they were overwhelmed with the response of insurance companies; they came back faster than they thought they would."
The bi-partisan legislation co-authored by Thompson, a Democrat, and U.S. Rep. Doug LaMalfa, a Republican who represents Butte County where the devastating Paradise Fire happened, would 1) Provide grants of up to $10,000 for homeowners in disaster-prone regions for doing specified hazard mitigation work on their homes; and 2) Provide a 30 percent tax credit for these mitigation activities conducted by property owners, farms and businesses. (The credit complements the grant program by providing meaningful assistance to larger property owners for whom mitigation activity costs would far exceed $10,000.)
In addition, the legislation establishes that payments from state-run disaster resiliency programs and payments from various federal emergency agricultural programs are not considered income for federal tax purposes. It also advises states to direct insurers to consider plan owners’ disaster mitigation efforts when setting premiums.
Huffman, a Democrat, is a co-sponsor of the bill, which was introduced in March and is called the Disaster Resiliency and Coverage Act of 2024 (H.R. 7849).
"We call on the state of California to require insurance companies to consider these things as they make their decisions about where to offer coverage," Huffman said. "When you put it all together this is an important piece of making sure that insurance remains available and affordable to the folks that we committed almost seven years ago to continue and to stand with and to serve."
The bill would need to pass both the House of Representatives and Senate, plus the final signature of approval from President Joe Biden before it could go into effect.
