"In addition to consumers, housing industry players are also feeling the strain caused by rising premiums. Affordability is already a challenge for homeowners and insurance is just another catalyst making it more difficult for a lot of consumers to continue making their payments, Toby Wells, the president of Cornerstone Servicing, said. He adds that this, in turn, drives up costs for servicers as they need to provide these consumers with loss mitigation efforts."
"the root of these challenges dates back to 1988, when the state passed Proposition 103. It put limitations on a carrier's ability to be approved for rate increases, Milazzo said of the law. So, what happened over time, with this regulatory issue and with the state being prone to natural disasters like wildfires, is that it became impossible for the carriers to continue to provide coverage based on their inability to reset their premiums at a level that would cover the risk that they're assuming."
Rising homeowners insurance premiums are straining consumers and housing industry players, intensifying affordability challenges and leading to payment difficulties. Higher premiums increase servicer costs through greater loss-mitigation efforts and require careful management of service fees to avoid worsening affordability. Industry professionals have mobilized trade associations to pursue state-level homeowners insurance reforms, focusing advocacy where insurance is regulated. Advocacy efforts in California and Florida have produced meaningful change. California's insurance crisis traces to Proposition 103 (1988), which constrained rate approvals. Regulatory limits and delays from the Department of Insurance have prevented carriers from resetting premiums to match risk, reducing available coverage.
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