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Most of us are no stranger to the cost of insurance. In my house, we’ll soon be adding a new driver to our vehicle policies and the upcoming increase in premium cost is never far from our minds as my oldest quickly approaches his 16th birthday. The average person insures their house, vehicles, recreational vehicles, medical health and in many cases, even their untimely death. We assume the cost to insure our buildings and property, our crops and the products we produce, ourselves and the men and women who work with us. We pay to insure against weather, crime, injury, disaster, flood and any number of additional eventualities that could take place in the calculated risk market.
As farmers and ranchers, we know and understand that insurance is a cost of doing business. As consumers and citizens of the state of California, we also acknowledge and appreciate the protections under the state constitution and Prop 103 that require transparency in rate modeling and fairness in determining what those costs are.
Unfortunately, we find ourselves in a business climate right now where insurance providers are choosing to simply leave the California market instead of doing business in a space where they claim out of date and inadequate rate modeling and slow decisions from the California Department of Insurance on rate adjustments. All of this is made worse due to high building costs (something we all know) and unusually high jury verdicts. The California Department of Insurance has little incentive to approve higher rates so they are currently in a good old fashioned game of chicken and we farmers are right in the middle.
As many of you know firsthand, this development leaves many farmers and ranchers with an insurance crisis. How do you do business in a state where you can’t obtain insurance? The FAIR Plan was established as the insurer of last resort to provide some risk management in that situation. The FAIR Plan offers some amount of coverage for those deemed most at risk. The FAIR Plan is not intended to be and cannot be considered a long-term solution to the lack of competitive market options; however, for many it’s the only option unless something changes.
I’m proud to say Farm Bureau has been working on those changes for some time. As one of the only representatives from agriculture of a coalition of business groups, Peter Ansel in our Governmental Affairs Division seeks out solutions that will help farmers and ranchers have access to insurance through a healthy business model, that respects and adheres to the consumer protections and transparency in rate modeling.
The media has reported that legislative leaders, the Governor’s office, insurers, and the Department of Insurance are meeting and actively looking to find agreement with all stakeholders to return competition to the California insurance market. We cannot know how the structure of that agreement will ultimately affect policyholders, except to know that rates are not going down. Farm Bureau will continue advocating for a healthy business climate with healthy competition and appropriate consumer protections, because we know this is the only way our farmers and ranchers can continue leading the nation in the production of the highest quality food and fiber from the Golden State.
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