Impact of inflation as a result of COVID and increase of natural disasters

According to, the Federal Reserve printed money worth nearly $5 trillion.  Legislative and administrative actions make up another almost $7 trillion.  This represents nearly 50% of the US annual GDP.  Consequently, this influx of money is going to have a massive impact on creating inflation.  This inflation impacts insurance in two ways:  (1) the cost for insurers to exist based on their expenses inflates, and (2) the cost of claims inflates. Under California Insurance Commissioner Ricardo Lara, the Department of Insurance “uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies.” However, Insurance Commissioner Lara has been slow to approve requested rate increases and passive-aggressively denied rate increases through a lack of response.  He has repeatedly stated that global warming is where we need to focus efforts to reduce insurance costs.  While at a long-term, macro level this may be true, it does not address how he is working to create a competitive marketplace today.

By not approving necessary rate increases for insurers, more and more insurers are choosing to not sell their product rather than continue to sell it at a loss.  Not only is this forcing consumers to have to purchase from more costly, non-admitted insurers, in many cases it leaves the consumer with no options to purchase insurance altogether.

Impact of Prop 103 on homeowners, property insurance and casualty lines

This ancient law was put into place in 1998 as an overreaching consumer watchdog bill.  It is hurting the consumer by placing overly onerous requirements on insurers seeking to increase rates such as:

  1. Anyone can request a hearing with the California Department of Insurance if rate increase filings exceed 7%. This slows everything down at a time when the economy as a whole is inflating at a rate of much more than 7%.
  2. Insured parties are granted authority to sue insurers and may have all expenses paid for by the insurers. The overly broad language allows anyone to bring litigation against insurers, which increases the insuring expense to offer their products. Thus, the insurers will respond by passing increased costs to the buyers and inflating the marketplace.

Nuclear verdicts, policy limit demands and juries wanting to make insurers “pay”

According to, in 2021 California had over 200 nuclear verdicts, judgements found by a jury in excess of $100 million. This has a massive impact on how insurers settle cases.  If an applicant attorney representing the injured party places a “policy limit demand” to settle the case and the insurer does not settle, then the insurer is responsible for any amount of damage awarded by the jury, even in excess of the policy limits.  Thus, due to the threat of nuclear verdicts at trial, more and more insurers are settling claims at inflated policy limit demands.