Local agent Padilla explains insurance industry problems
When Pete Padilla showed up at a recent, noonday Merced Rotary Club meeting, everyone knew him as one of Merced’s premier insurance agents. He has spent most his whole life in the business.
He was invited to explain what is going on with the Insurance Industry in California, and why so many companies have stopped offering insurance in this state.
In a nutshell, the State of California has put so many restrictions on insurance companies, they can no longer raise rates to the point where they can afford to pay off all the claims.
The wildfires in the state are perfect examples. California has had some of the worst fires in its history. The one in Paradise was a case in point where the devastation was terrible as almost the whole community was burned down. PG&E was not able to pay all the claims.
In one case, a member of the Rotary Club said his son, who lives in Paradise, got a bill of over $9,000 to insure his house for the next year.
Padilla said his company has never refused to insure his clients; however, other companies have. The Insurance Companies in California have gone head to head with the State in coming to a solution. Meanwhile, the State has offered to insure homes by subsidizing the premiums.
Many home owners have mortgages which demand they be covered.
During his talk to Rotarians, Padilla answered many questions; however, he explained the problem is far from being solved.
Insurance companies can’t afford to insure in California if it means losing money to do so. It does not make good sense, so they are back out until the state comes up with a plan to allow the insurance companies to adjust rates to where they are equitable for all concerned.
The situation is changing week to week as the major players try to mediate a solution. Meanwhile, those needing polices are caught in the middle.