Home Insurance to Change Under New Bill as States Face 'Catastrophe'

A leading California Senate candidate is looking to execute a proposal that could change the insurance business in the hope that will lead to lower costs in the state which has struggled over expensive coverage that in some cases led to providers ceasing operations.

Adam Schiff, the current U.S. House representative from the Golden Gate state and is currently seeking to get elected to the Senate, has offered a plan that will allow residents in his state and potentially other parts of the country to secure alternative and cheaper insurance. The "insurance catastrophes" face states beyond California, Schiff said in an interview with Bloomberg.

"There are huge numbers of Californians and people around the country who should be able to buy insurance and yet, because of the way the system has not worked, they're just unable to buy coverage that's the least bit affordable," Schiff said in an interview. "This is something we have to address."

Newsweek contacted Schiff's campaign for comment via email on Wednesday.

California has battled increased climate change-related weather disruptions which have exacerbated the costs of coverage, including for homeowners insurance. Some companies, including State Farm and Allstate, have cited increased costs for ceasing to provide coverage to customers in the state.

Schiff's plan will aim to offer a federal reinsurance alternative that can be less costly than what is currently available in the market. The proposal revealed in January aimed to establish what the lawmaker described as a "federal catastrophic reinsurance program" by mitigating the rise of coverage costs that can emerge from climate-related incidents.

"My INSURE Act addresses the urgent crisis in the home insurance market, particularly in California, where the cost of insurance has gone through the roof and insurers have stopped writing new policies," Schiff said in a statement earlier this year. "Climate change has significantly increased the risk of natural disasters and insurance companies are shifting the costs to consumers who struggle to purchase disaster coverage."

Critics of the proposal have suggested that the move could lower premiums without incorporating the high costs characterizing the sector at the moment.

Schiff told Bloomberg that coverage was already doing that.

"Policies are already reflecting those higher costs," he said.

The plan will give priority to providing coverage for weather-related events, such as floods, winds and hurricanes, according to Bloomberg.

Schiff suggested that his proposal has the potential to attract support across the political spectrum.

"There's nothing partisan about trying to make sure that your constituents can afford insurance," he told Bloomberg. "A lot of the red states are at the most risk of climate disasters. California is maybe a blue outlier in that scenario. But a lot of deep red states are facing their own insurance catastrophes."