CEA Rate Application Approved by California Department of Insurance
The California Department of Insurance (CDI) on February 10, 2006, approved the CEA’s application to reduce rates by a statewide average of 22.1 percent. As a result, 85 percent of CEA policyholders will experience a reduction in their earthquake insurance rates beginning July 1st of this year.
The CEA Governing Board approved filing for lower rates last summer after staff crafted a rate application based on new information on earthquake-hazard and soils as well as lower CEA expenses. After the application was filed in September 2005, the CEA agreed to adjustments suggested by CDI, and it was the adjusted application that earned CDI approval.
Under the approved application, there will be a 22.8 percent overall rate decrease for CEA dwelling policies (base-limits program). Decreases will differ for renters and condominium owners, and mobilehome owners will not be affected. About 15 percent of CEA policyholders will see a rate increase, but negotiated adjustments will allow those increases to be phased-in over three years, as requested by the CDI and ratified by the Board in January.
Two applications are still pending with the Department:
Both proposed changes require revisions to existing regulations. CEA anticipates the regulation revisions will be in place in time for the planned July 1st implementation of the new rate plan.
Governing Board Continues Review of White Papers
The Board moved forward on critical issues at back-to-back meetings in January and February.
On January 30th, the Board approved an innovative plan to finance the CEA’s supplemental program, beginning in 2007. Keying on the CEA’s first-ever issuance of revenue bonds, already planned and approved to diversify and enhance CEA finances, the Board voted to use a portion of bond proceeds to underpin a new reinsurance arrangement.
At its February 23rd meeting, the Board heard a third and final installment of staff’s research white papers, with this analysis addressing the CEA’s investment policies—much of the paper keyed on suggestions derived from CEA public meetings held last summer in San Francisco and Los Angeles. The Board also reviewed and approved the staff’s recommendation for next year’s financial structure—in that regard, CEA Chief Financial Officer Tim Richison is meeting with reinsurers at this writing to secure appropriate claim-paying capacity and will report to the Board at its April meeting.
To review full Board agendas, visit the CEA Web site at www.EarthquakeAuthority.com.
CEA Continues Financial-Strength Dialogue with Participating Insurers
The CEA executive staff is encouraged by the consistent show of interest and support by participating insurers in regular meetings called by the CEA to discuss the CEA’s present and future financial strength. The staff hosted two meetings in February at the CEA office. Four meetings in all were originally scheduled, but the insurers’ considerable interest could extend the dialogue.
CEA Goes On-Site to Learn From Gulf Mega-Catastrophes
CEA claims manager Dan Dyce was on-site in the Southeastern United States for two weeks in January to observe areas where insurers continue to respond to the devastation of Hurricane Katrina. The experience will help the CEA enhance its implementation of a primary strategic goal, to provide excellent customer service and ensure claims are processed promptly, fairly, and consistently.
Insurer claims managers and adjusters welcomed the CEA as both observer of and participant in companies’ post-disaster response to the overwhelming number of catastrophe-insurance claims. The industry had recruited a substantial number of adjusters, all of whom were quickly trained and deployed where needed in the disaster-ravaged areas. Of particular help in adjusting claims on property still under water, the newest satellite-imaging technology made it possible for adjusters to gather data about such inaccessible areas remotely and immediately gauge damage and authorize payouts.
The CEA contracts with and ultimately depends on its participating insurers to adjust its claims—the strength of this arrangement can only be enhanced by this crucial post-Katrina claims experience.
CEA to Help the Bay Area Commemorate ‘06 SF Quake in April
April will be a significant month for San Francisco and the Bay Area as the nearly 300 organizations making up the ’06 Alliance help commemorate the centennial of the Great San Francisco Earthquake and Fire of 1906. With full Governing Board support, the CEA is a major contributor to the efforts, supporting many activities and events, among them a special insertion of the CEA-sponsored Putting Down Roots in Earthquake Country handbook in Northern California’s Contra Costa Times and San Jose Mercury News and Southern California’s Los Angeles Times.
Plans also include distributing Putting Down Roots at retail locations, including Orchard Supply Hardware, Lowe’s, and Home Depot.
A centerpiece of CEA sponsorship and efforts is the design, production, and printing of an attractive and highly useful commemorative calendar of events, slated for distribution throughout the Bay Area.
The CEA continues its support of the Oakland Museum of California’s interactive exhibit, Aftershock!, which will shake visitors’ earthquake consciousness with a full-size shake-table that simulates the ‘06 Quake’s violent ground motion. The exhibit opens April 1, 2006, and runs through August. To make the most of the learning and earthquake-preparedness opportunities for consumers, the CEA will contribute to advertising to support the exhibition and other ’06 Alliance projects.
The CEA is also a sponsor of an upcoming documentary produced by the Bay Area’s KPIX-CBS Television 5. The one-hour special features science from the United States Geological Survey and chronicles the ’06 Quake and its aftermath as well as the City’s recovery—it will also examine modern-day issues of safety and preparedness. Check your local listings for the early-April air date, and watch for the CEA’s preparedness messages scheduled to air during the program.
The ’06 Alliance’s Web site is a great resource for information about family-oriented activities and events related to the Great Quake. The events kicked off in January and are held throughout the 10 Bay Area counties. Access the ‘06 Alliance information at http://1906centennial.org.
2006 CEA Governing Board and Advisory Panel Meeting Schedules
CEA Governing Board
CEA Advisory Panel
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