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HomeMy WebLinkAbout5.2 Hmeownr&ErthqkeInsurCrisis l t . CITY OF DUBLIN AGENDA STATEMENT CITY COUNCIL MEETING DATE: August 8, 1995 SUBJECT Homeowner and Earthquake Insurance Crisis (Prepared by: Lou Ann Riera-Texeira, Assistant to the City Manager) EXHffiITS ATTACHED 1. Correspondence from Dick Spees, Vice Mayor, City of Oakland 2. Sample Resolution RECOMMENDATION ~nSider request. FINANCIAL STATEMENT: No financial impact. DESCRIPTION Correspondence has been received from the City of Oakland requesting that the Dublin City Council join Oakland in lobbying the State Legislature to resolve the homeowner and earthquake insurance crisis. As indicated in the attached letter, as a result of recent catastrophic natural disasters including the Northridge earthquake and Oakland-Berkeley Hills fire, over 75% of insurance carriers have either ceased or severely limited enting new homeowner policies in California; and some carriers have even banned new policies in specific geographic areas of the state. The City of Oakland has expressed concern regarding the lack of affordable, readily available homeowners insurance and the impacts on the state's home-building and real estate industries. Further, Oakland expresses concern over the insurance industry's failure to recognize the extraordinary measures of local communities who have taxed and assessed themselves to fund needed improvements to fire prevention and emergency preparedness and response. The City of Oakland proposes to lobby the State Legislature and the Insurance Commissioner to resolve the crisis in the availability and affordability of homeowners insurance during the current session. The City of Oakland requests support from other local cities. Oakland invites the City of Dublin to adopt a resolution calling upon the State Legislature and the Department of Insurance to resolve the homeowners insurance crisis in California; and invites Dublin to join Oakland in mid-August to directly lobby the State. It is recommended that the Dublin City Council consider the request made by the City of Oakland to adopt a resolution and to participate in Oakland's lobbying efforts. --------------------------------------------------------------------------- ~TEMNO ,.2 COPIES TO: CITY CLERK FILE ~ ; /I C,t t p Gr'~"'- 'J \,J' " " ,. (j. ,-e.. \ 'j t'"' Cfry Of OAKLAND . CITY HAll ONE CITY HALL PLAZA OAKLAND, CALIFORNIA 94612 Dick Spees Vice Mayor 510/238.3266 FAX/238-6129 July 18, 1995 Re: Homeowner and Earthquake Insurance Crisis Dear Mayor/City Manager: I am writing you to inquire about your interest in joining the Oakland City Council in pressing the State Legtilature to resolve the homeowner and e&rthquake :::s::.r~:.:e crisis. Since the Nort'uidge earthquake, seventy-five percent of homeowners' insurance carriers have suspended or severely limited writing new homeowners' policies. Thousands of homeowners are having their existing policies non- renewed. And California's real estate industry confmns that new home sales are held up by the inability of buyers to fmd adequate insurance at an affordable cost. In Oakland we are particularly concerned because, following the Oakland-Berkeley Hills fire of 1991, the city's residents agreed to costly new assessments and a general obligation bond to fund fire mitigation and emergency preparedness upgrades. In spite of these extraordinary measures, our homeowners are experiencing great difficulty obtaining and keeping insurance. . The Oakland City Council has approved the enclosed resolution, calling upon the Legislature and the Department of Insurance to resolve this statewide crisis. We invite you to consider adopting a similar resolution, and to fax a copy to us in care of our city's Sacramento representative, Ken Emanuels (FAX: 916-444-0303) Last week, Mayor Elihu Harris and I met in Sacramento with each of the primary "players" in this debate . We learned that the State Insurance Commissioner shortly will propose the formation of a new state natural disaster insurance pool. We also confirmed that all parties expect the major legislative issues to be resolved by a conference committee in August. Would you be interested in joining us in mid-August in Sacramento to lobby directly the conference committee? We will plan a day of background briefings, meetings with legislators and testimony before the committee, all intended to light a fire for an acceptable resolution for our residents. If you can join us, please contact Mr. Emanuels at (916) 444-6789. When arrangements are in place, he will contact you with the date, time, location and all the details. IT~' . DICk Spees Vice Mayor Enclosure: Sample Resolution "l:::f}, -i~WJ OAKLAND CITY COUNCIL RESOLUTION No. C. M. S. INTROOUCEC BY COUNCILMEMBER \ ~. RESOLUTION CALLING UPON THE STATE.. LEGISLATURE AND THE DEPARTMENT OF INSURANCE TO RESOLVE THE HOMEOWNERS INSURANCE CRISIS IN CALIFORNIA WHEREAS, having suffered substantial losses in California due to catastrophic natural disasters, seventy-five percent of insurance carriers have either ceased or severely limited writing new homeowners policies in California, and some carriers have banned new policies in specific geographic areas of the state; and . WHEREAS, California homeowners are facing a crisis due to the lack of affordable, readily available homeowners insurance; and that crisis is having far-reaching effects on the state's homebuilding and real estate industries; and WHEREAS, the insurance companies have failed to recognize the extraordinary measures of local communities who have taxed and assessed themselves to fund needed improvements to fire prevention and emergency preparedness and response; and WHEREAS, efforts to negotiate a new mechanism. for catastrophic insurance coverage have failed to achieve a resolution that is economically viable and fair to all parties throughout the state; and . WHEREAS, the crisis to all Californians has become so severe that it demands urgent attention and speedy resolution, THEREFORE, BE IT RESOLVED, that the City of Oakland joins other cities in California in declaring the following principles: RESOLVED, that the delinkage of earthquake and homeowners insurance should only occur after state and/or federal natural disaster insurance pools are established to provide affordable and adequate earthquake coverage; RESOLVED, that basic catastrophic coverage should be provided to restore a home's habitability, and that such basic coverage should be available with minimal deductible and without any cap on insured value; RESOLVED, that all insurance companies offering any type of insurance in California should be required to pay an assessment to the statewide catastrophic insurance pool to ensure its continued viability; . . 500,~'5 (7.83) . . RESOLVED, that when setting rates and determining risk, insurance companies should be required to take into account the existence of local programs to upgrade emergency infrastructure and/or to reduce fire fuels such as wildland brush in public open space and overgrown vegetation within household perimeters in compliance with local and state fire codes; RESOLVED, that nonrenewals of insurance should be subject to the same restrictions as cancellations, and that these principles should be clearly outlined in the legislation; and that insurance companies should be required to maintain existing homeowners' policies as long as policyholders meet the underwriting guidelines specified in the legislation; and be it further . . RESOLVED, that the City of Oakland calls upon the State Legislature and the Insurance Commissioner to resolve the crisis in the availability and affordability of homeowners insurance during the current session in order to protect the state economy and the safety and well-being of all California property owners. . I certify t1z.at tize fongoing is l1 fuiI., &ru.e and CDrre~ copy of a ResoWrion passed by the Cir; Council of me Ciry of OaIci.aJu4 California on ~UL 1 1 1995 '. CEDA FLOYD Ci.ty Clerk ami aerk of clre Cocmcl . Per {)It~ ~ Depury RESOLUTION NO. - 95 A RESOLUTION OF THE CITY COUNCIL . OF THE CITY OF DUBLIN CALLING UPON THE STATE LEGISLATURE AND THE DEPARTMENT OF INSURANCE TO RESOLVE THE HOMEOWNERS INSURANCE CRISIS IN . CALIFORNIA **.**........***..**....... . , WHEREAS, having suffered substantial losses in California due to catastrophic natural disasters, seventy-five percent of insurance carriers have either ceased or severely limited writing new homeowners policies in California, and some carriers have banned new policies in specific geographic areas of the state; and WHEREAS, California homeowners are facing a crisis due to the lack of affordable, readily available homeowners insurance; and that crisis is having far- reaching effects on the state's home-building and real estate industries; and WHEREAS, the insurance companies have failed to recognize the extraordinary measures of local communities who have taxed and assessed themselves to fund needed improvements to fire prevention and emergency preparedness and response; and WHEREAS, efforts to negotiate a new mechanism for catastrophic insurance coverage have failed to a resolution that is economically viable and . fair to all parties throughout the state; and WHEREAS, the crisis to all Californians has become so severe that it demands urgent attention and speedy resolution, .' NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin joins other cities in California in declaring the following principles: RESOLVED, that the delinkage of earthquake and homeowners insurance should only occur after state and/or federal natural disaster insurance pools are established to provide affordable and adequate earthquake coverage; RESOLVED, that basic catastrophic coverage should be provided to restore a home's habitability, and that such basic coverage should be available with minimal deductible and without any cap on insured value; RESOLVED, that all insurance companies offering any type of insurance in California should be required to pay an assessment to the statewide catastrophic insurance pool to ensure its continued viability; RESOLVED, that when setting rates and determining risk, insurance companies should be required to take into account the existence of local programs to upgrade emergency infrastructure and/or to reduce fire fuels such as wildland brush in public open space and overgrown vegetation within . household perimeters in compliance with local and state fire codes; . RESOLVED, that non-renewals of insurance should be subject to the same restrictions as cancellations, and that these principles should be clearly outlined in the legislation; and that insurance companies should be required to maintain existing homeowners' policies as long as policyholders meet the underwriting guidelines specified in the legislation; and BE IT FURTHER RESOLVED, that the City of Dublin calls upon the State Legislature and the Insurance Commissioner to resolve the crisis in the availability and affordability of homeowners insurance during the current session in order to protect the state economy and the safety and well-being of all California property owners. PASSED, APPROVED AND ADOPTED this 8th day of August, 1995. AYES: NOES: ABSENT: Mayor . ATTEST: City Clerk .