What the candidates think about California's Insurance Crisis

And we continue at one five in the afternoon on The John Phillips Show, Mister Randy Weggs in Culver City. John.

Just a few minutes ago, at a press conference about Earth Day, current California Governor Gavin Newsom was asked who he likes in the governor's race and if he's going to watch tonight's debate on next Star.

I'm supporting a Democrat in the runoff and look forward to the voters making that decision very shortly.

What if it's two of them or what if it's none of them? Boy, he has opinions on everything, whether it comes to Iran or Donald Trump, or Ice or all of these subjects that really don't have much to do with state politics. But if you ask him a question about state politics, he turns into Switzerland.

Well, and his press team likes to comment on anything and everything that's trending on social media.

Didn't have a damn thing to say about Swell. Oh yeah, Well the handcuffs who are on? Is? He don't think there will be one? Absolutely, confident of that, Shangy, Can I get an assist on that. I don't think there will be one.

Absolutely. There are a lot of outstanding candidates with extraordinary records.

I can name fact check. Yeah, how about that CNN article where you said that if Katie Porter gets elected, she's going to drive all the businesses out of state. No, or that Javier Baccaria was an awful attorney general.

There are a lot of outstanding candidates with extraordinary records. I can name seven of them, though I think there were nine with Betty Now, Yeah.

Who was the other person that dropped out?

Oh?

I guess that would be Calderon. He's the one Calderon that's not in prison.

No, he's he's specifically not talking about Swallwell oh, yes, yes, yes.

Because as as someone that's grown up in state of California, I had an opportunity to work with every single person that is running for that office, and had the privilege of working and partnering with them in many different capacities over many many years. And I respect to respect their willingness to put themselves out and looking forward to the debate tonight, and I'm looking forward to where the voters ultimately land.

Boy, he sounds so checked out as soon as you ask him about anything going on in California.

What is he going to do if he runs for president and loses. Podcast. That's what that's all about. Backup plan, baby with that voice. He loves it. Okay, this isn't like a new thing for him. When he was lieutenant governor, he had that TV show on Al Gore's network, Current TV. When he was mayor of San Francisco, he would do a monthly radio show. He loves the medium of broadcasting. You think he'd want to fill in for us when we're on vacation.

I mean, they do say to always make sure that the person fills in for you is not as good as you, So that'd be great for us.

What do you think I had in mind? Eight hundred two two two five two two two is a telephone number?

One?

Eight hundred two two two five two two two. Well, tonight is debate night for all the candidates running for governor. And we know that the likely scenario is that Katie Porter is going to attack Tom Steyer. We know that Tom Steyer is going to attack Javy or Besserah. We know that Steve Hilton is going to attack Chad Bianco.

Julie Watts of CBS News Investigates sat down with every single candidate a few months ago and has asked them every a old, every single candidate, the same questions, and instead of releasing here's an interview with Tom Steyer, here's an interview with Katie Porter, and yes, I want to see that whole interview. She has released these compilations where she talks to every single candidate about one specific issue.

Insur insurance, insurance.

What do you do to stabilize California's insurance market without pushing insurers out of California. We're looking at folks who cannot get insurance. How do you keep insurance companies in California while still keeping rates down in a world where

No, but there's so many common sense things you can do, for example, So there was I think there's some ledge, I mean, I need to dig into it, but that's someone in the issuance.

Wait, you need to dig into it. You know the policy on everything. Yeah, he certainly does offer more details of the rest of them.

I think there's some ledge, I mean, I need to dig into it, but that someone in the insurance industry was telling me that there's a legislation that actually that stops something incredibly common sense being done, which is defensible space being put around new building in those errors. But anyways, as I understand it, that the LAARA, the insurance Commissioner, has finally made the changes in how insurance companies can prise future.

Risk, and that hasn't taken anybody off the fair place, and it isn't making insurance any more available.

No, no, No, RICARDA. Laura is not the authority on anything except for maybe certain items that can be purchased in Colombia. I'm very kind of sketch you cannot delegate this very important issue to a buffoon like him. You can't do it.

It's got to be hard for the Republican candidates to even talk about this because what Ricardo Laura has done is given the insurance companies everything they want and they're still screwing us over and they're still not paying out claims.

Yeah, a lot of people have been asking for for many years.

I mean, you know, that's.

Sort of a separate issue, but I mean, but.

Let's let's get you know, there's a massive issue for so many Californias. Either these insanely high premiums they're paying or they can't get in short a tool and they're on the Fair Plan. And we know that the the state we're on Fair Plan is a disaster. If anything goes roll, that's a massive financial liability.

This is a huge problem.

And in fact, Ricardo Lara was the one that changed the rules right before the big Palisades and Eden fires where it used to be the Fair Plan, which by the way, is not a state plan. It is a consortium of the insurance companies created after the Watts riots, and the whole deal was okay, if you don't want to ensure them. You have to have this company insure them as the insurer last resort.

But if you put too many.

People on that plan and that plan goes belly up, you're on the hook for it. Ricardo Lara changed the rules to say that the ratepayers are on the hook for it.

Well, and what's so wild about insurance right now is we get the worst of both worlds. We have regulations that determine what the insurance companies can charge you, which I'm not in favor of price control, so I would never vote for that. But fine, that's the law. So what do we do. We allow them to raise the rates the maximum amount every time they ask. That's what historically has happened. However, the insurance companies say that's still

I will say, though, when you look at what happened in Florida, and Florida is a different situation because of all of the risk of flood, which is a big majority of the state. You have a lot of people who own condos that their insurance premiums tripled, quadrupled in the last couple of years to the point where the insurance is more than the mortgage payment. And you have people trying to sell and leave and nobody wants to buy.

And that's a different set of problems. But right now in California, you can't even buy insurance, and if you can buy insurance, you can't use it.

And so I've spoken to the industry about it, and the insurance industry tell me that finally they feel that some of these longstanding policy mistakes have been corrected.

Yes, like using their own proprietory climate model that we don't get to see for them to price their risk.

I don't like that either. And this is also one of these weird subjects where the left and the right come together. The insurance companies and Greta Thunberg are on the same page. They believe that the world is going to end eleven years from now. Well, if the world is going to end eleven years from now, then you can price accordingly. Well, if you're a consumer, that doesn't work for you, especially if they won't even show you their work.

And so that they're telling me, I mean, we need to dig into it more, and perhaps you could.

Do some investigation, investigation, And she's done a lot of investigations on this, Oh yeah, investigation.

The insurance industry is telling me that actually things are getting back to on the track that they feel they're going to come back into the state. Yes, rates are going to go up, but at least they're going to be able to ensure because they can price risk properly. So that's what I'm being told.

But again, let's look at.

You know, we're going to get to a point where it is so unaffordable to have insurance that people can't get a mortgage. And if you can't get a mortgage and that industry collapses, what's going to happen.

Well, it's going to be one of these states where the extreme bias is to all cash offers. And if the only type of person who can buy a property is an all cash offer, then you really are going to price the middle class out of the state.

But again, let's look at another component. Why premiums so much higher in California Because building costs are so much higher in California.

Okay, on this one, he's totally right. Just the cost of lumber is more expensive in the state of California, which means the cost of rebuild is way higher than anyone in Eaton Canyon was covered for.

So of course, if you're insured a building, like what's the replacement.

And most people are under inshirt because.

Because it costs so much. So if we bring that all these things tied together. If we bring the cost of building down, that's another way we can bring insurance costs down, because it doesn't it costs so much to rebuild in the event that something happens.

One of the things he has advocated for, and it sure makes sense to me, is you know, we've got all these forests that are way out of control that we're not cleaning up. Why don't we reactivate the timber industry so there's not as much fuel to burn and then we have cheaper lumber that we're not importing from Kanada. And when you think about it, yes, land is more expensive in California than it is in Utah, Montana, wherever.

Sures have to make money. There are two things we need to do here, both of them possible, of them driven by new technology. And new ideas. One is wildfire control.

This is a if you can tell we've moved on to the most grating voice in the campaign, both.

Of them driven by new technology and new ideas. One is wildfire control. This is a this is a fire ecology. They're always going to be fires. What we're trying to avoid is devastating fires.

And we've had some of the most devastating fires in the state's history just in the last five years.

Including in the state's population centers like in Altadena and Pacific Palisades.

And that is something that can be monitored, that can be controlled with new technologies. I believe the governor's you know, doing it, but I believe we can control.

I believe you haven't even been following what the governor does. No, no, And take the fire in the Pacific Palisades. That was a complete failure of government. That was the state getting involved in something that they had no business getting involved in, and they were the ones that are responsible for that fire not being fully extinguished.

You know doing it, But I believe we can control devastating fires. That's the actual issue. But the second thing is I believe they're new technologies that are quite inexpensive and can be financed to harden houses that have an incredibly high success rate, way over ninety percent. If that's true, and both of those I believe to be true.

By the way, there are technologies like that, and I'm in the opinion of the insurance companies should pay for those if it makes their risk much lower. They should be buying you the thing that make sure that you have the retardant that flies out of your house when the fire starts.

Whoa, whoa, whoa, whoa, whoa. I thought we weren't allowed to use that word anymore.

Retardent if that's true. The pink stuff, if that's true.

Minute the health insurance companies, they're willing to buy the flu shot, they're willing to buy the gym membership up, They're willing to pay for any number of things that are proactive to keep you out of the er. So I think that you have a point there, Randy, that the insurance companies I think would be willing to incur at least some of those costs. Oh they're not.

In fact, we never got to it, but there was a Julie Watts investigation for a few weeks ago on how insurance companies are adding all these things in the Bay Area, like earthquake detectors what have you, that you have to foot the bill for or they won't cover you.

If that's true, and both of those I believe to be true, we should go to insurance companies. This is the biggest insurance market in the United States of America.

Or when he goes up in Octave, it's even more uncomfortable. They want to be here, to be they do not want to be here.

They have to be able to write insurance that makes money. The job of the governor is to go to them and say, you need to take into account the data. We've solved this problem. You can look at it, you can.

Write, Okay, sef he is the biggest global warming alarmist on planet Earth. If he were to get elected and they were to use his modeling, the state modeling that I'm sure would come from a styr administration, what do you think they would use that for?

Well, this shows the disconnect between the billionaire and the people who have average means that are running for this office. He has no idea what his insurance premiums are and he doesn't care if they go up three hundred or four hundred percent.

No, because it's his secretary that's writing the check.

Anyway, successful in churance, we insist that you'd get the data and charge people fairly for the people who've hardened their houses. And to take an account the fact that we have as a state dealt with devastating wildfires.

We have not dealt with devastating wildfires. All right, we'll have more from the candidates on the subject of the insurance crisis coming up in moments each the John phil If you'd like to email the show, you can do so at Johnny Don't Like Show at gmail dot com. That's Johnny Don't Like Show at gmail dot com and Randy. Now that we've hit the halfway point of today's show, if you want to continue listening after we sign off at three, that's easy to do.

All you got to do is search for The John Phillips Show wherever you get your podcast, whether it's the Apple podcast app, iHeart, Spotify, search for the John Phillips Show, hit subscribe. You can download all the episodes. You could do a Google on the YouTube. You can get the free KABC app or the free KSFO app. You can also get that KMJ now app because we're on the

Otherwise you busted the trust. And you know what they say, don't bust the trust. Eight hundred two two two five two two two. Easy telephone number what eight hundred two two two five two two two. John Morgan joins us at the top of the hour. Right now, we're going through the interviews between the candidates for governor and CBS News is Julie Watts on the subject of California's insurance crisis. Let's get back to the candidates.

So I think we need to think about Oh, you know.

Whose turn it is, it's our girl. Oh and yes, in case you were wondering, this is the same interview. It's just you know they released the clips of it throughout the year, but this is the exact same interview where Katie Porter ripped off the microphone and said, I don't want to do this anymore.

Well to those voters, Okay, so, so I don't want to keep doing this. I'm gonna call it. Thank you. You're not gonna do the interview with them.

Nope, not like this.

I'm not not with seven follow ups to every single question you.

Ask America's sweetheart. I think there will be a moment in tonight's debate like that, God willing.

So I think we need to think about changing some of the rules around how insurance companies function in California. I think the proposal that the Insurance Commissioner rolled out is the right one.

I think, no, what alternate universe are we living in where Ricardo Laura is being treated like some kind of elder statesman. It's really bizarre.

The Insurance Commissioner rolled out you.

Have what may be the most inapt and corrupt member of the entire state government, and that's saying something being propped up because they all know that this is a disaster, so they want to say this is Ricardo's plan. But no one wants to go after because if they come up with their own plan, then they'll own the crisis.

And mind you, the position that all of these candidates are taking is the same position that Gavin took the.

Insurance Commissioner rolled out is the right one. I think it came too late. We've already seen too many exits. We've already seen rates go up too soon.

I support the wildfire and one of the things that he authorizes that rates can go up faster.

If they have a hearing that he doesn't attend, and prior to the hearing actually starting, he said he was going to give him their rate increase.

I support the wildfire fund. I think that's going to be a big part of having a planning case of catastrophic wildfire, so that our insurers know that that fund is going to be there for them, and people who lose their homes know that fund is going to be there for them. That fund needs to be recapitalized and restarted. That's up right now for debates.

So that means that what we're going to have the insurance companies are getting pretty much reinsurance from us. This is so screwed up. No, I'm telling you the entire industry is a house of cards. And if we're at a point where nothing is insurable and the companies really can't make any money anymore unless they raise rates to the point where no one can afford a mortgage, I don't know what we do.

That fund needs to be recapitalized and restarted. That's up right now for debate in the legislature, and I support that fund. Ultimately, I think we're going to have to be realistic. The costs of insurance are going up in many places. That's not just true in California. That climate change is happening everywhere. But the way to bring costs down is to make sure we have a lot of companies in the marketplace competing on price.

So we're Shure, Wants, Adriana and Veronica competing over your rate.

Talk about a cage match.

So we're not going to be able to bring the price down unless we retain those companies.

So we're going to so we can't bring the companies back unless they can charge us as much as they're charging in Florida. Great, all right, let's see if Mayheon has a better answer. So far, I'm not impressed with anybody, and usually they always frontload these things with the front runner candidate, So it's Steve Hilton, and usually you're impressed by everything he says. And I wasn't impressed with that either.

So we're going to have to bring back the private insurance market. And it's comparable to what we're seeing in energy. If we don't have a functioning, competitive market, prices go up, and pretty soon we're overly reliant on government to provide services, and we don't have the resources to do at the scale we would need. We'll have to allow the private sector to come back into the insurance market in California. That means we have to build a price risk and

If way, I like that. So far, this is the most coherent answer, and by the way, apropol of nothing. I think part of the problem that we have in California is that our elected leaders look at insurance companies the same way they look at utilities. Utilities will always have to do business in California. This is where their equipment is, this is where their customers are. They just can't pick up their equipment and move to Nevada or

Well it's actually even worse than that because reporting that we found out was when Ricardo Laura was crafting his system staintable insurance strategy for the last three years, he let the executives at State Farm know what he was doing, and it actually gave them an incentive to set the table for why we needed these regulations. They actually had a vested interest in dropping everybody in twenty twenty three and twenty twenty four, so Ricarlo Laura could say, we

If we have fewer catastrophic fires in the coming years, we will not only save lives and property, but we will see rates start to come down. And so the state has to play How.

Is he only at five percent? What is wrong with the state because writing this Democratic candidate talking about California issues, there's no appetite at all among Democratic voters for that, unfortunately.

And so the state has to play a role in better reducing large fire risk.

And cat catastrophic loss.

Also, though, need to have a functioning market where private insurance companies are competing for people's business versus what we have today, or where government's the only backstop and we don't have the funds to actually deal with the amount of need that's out there.

Yeah, so if you remember these so so far, that's the most coherent answer from Matt Mahan.

And by the way, don't forget what we learned from James Gallagher, who is the Assembly Republican leader, former Assembly Republican leader who also represents Paradise, California. He said on this program that the Fair Plan is insolvent, which means they can't pay you if they owe you money and they're your insurance company. And something bad happens, you know.

Whose turn it is, the surging candidate, the one that the machine seems to be getting behind.

Plan d Javier Bakeria scrub it.

So if you remember, the insurance market is based on spreading risk, right, the more people you have, the more you can spread the risk.

Somebody has a problem.

It sure seems like every single issue. He has just the most basic, rudimentary understanding of it.

Yep. And this guy is the new one that everyone's looking. He's the shiny new object.

So if you remember, the insurance market is based on uh, spreading risk, right, the more people you have, the more you can spread the risk. Somebody has a problem, You got a whole bunch of other folks who don't spreading risk. Okay, you can still make money, So the insurance industry can still make money. They just have to know how to spread the risk. And what we have to make sure is that when we pay them, they're not using that

And then I guess he needs to scrub it. Oh, we're going to do some scrub a dub dub and scrub it.

And that's what Ricardo Laura. So he's doing right now. I mean to support what the Insurancemission's doing right now.

I can't tell you, but Sarah doesn't even know who the insurance commissioner is. Nope, I can't tell you. I know everything that the insurance Commissioner's doing.

What I can't tell you is there are still people.

It's amazing how many people that are running for governor do not know. We'll openly admit that they don't know anything about what's going on in the state. How could you not even familiarize yourself with this information before you put your name on the ballot to run the state. If you don't think this is a priority issue, you're not paying attention. Now for the average California voter, it may not be a priority issue, and that's how we are where we are.

I can't tell you I know everything that the insurance Commissioner's doing.

What I can't tell you is there are still people in the Pacific Palisades in Altadena who haven't yet heard from their insurance company about when they're going to get their money or how much they're going to.

Get Yes, and the Insurance Commissioner is not doing a damn thing about that.

Yeah. Isn't that the job of the California Department of Insurance to make sure that the insurance companies fulfill their contractual obligations, And that I.

Would never let stand. I would do what I did as secretary, where I had to bring in industry titans and said, you have a problem, we have to resolve it. We're not leaving this room until we come up with a solution.

We did that.

He's going to tell the companies you're grounded. Yeah, I'm sure State Farm will quiver. There's not a whole lot of policy coming out of Besarah No, and don't expect to hear much from him tonight either.

We could do that again with the insurance insurance industry and say, at least even if I don't have, by law the right to say this. I can say, Look, you don't want me to go out as governor and say that you aren't willing to tell your own customers when they can expect to receive their check for their burned house, that burn, you know, six months ago.

This is how we got here.

Oh, it's time for mister peanut. All right, We're gonna take a quick break, and when we return, we'll tell you what mister Peanut has to say about California's insurance crisis. Right now, we're going through the sound of all the candidates running for governor and what their opinions are on California's insurance crisis as they explain it. To CBS News is Julie Watts.

And it's time for He won't be on the debate stage tonight, but let's hear what he has to say. Anyway, recent guest of this show and Tonio Viragosa, pnut.

This is how we got here.

Until just recently, we didn't do catastrophic modeling in this state. Every other state in the country did catastrophic modeling because we're living in a world of climate change, you know, from.

Florida already, I feel this answer is getting expensive me too.

You know, from Florida, it's hurricanes. Here, it's fires.

Two used to be earthquakes, but nobody even talks about earthquakes in this state anymore.

It's been a while since we've had a big one, and I hope we just didn't chink. So us knock on wood right now? Okay, hang on? Oh wait, no, that's tile two.

We didn't allow reinsurance.

Every state allowed reinsurance.

Why allow them to charge for reinsurance? No, to pass on the cost of reinsurance to the consumer.

No, we didn't allow them.

Someone's confused, I can tell.

Look, there is a very very real thought to when everyone was looking at all of the candidates after Swallwell dropped out, it is obvious that even though he has a big resume, and even though he is pretty damn charming in person, Tony is old.

And it comes out well, he's saying that he would only serve one term. Yeah, that doesn't ever work to reinsure.

Well, they're all reinsured, but we didn't allow them to charge us. So, in other words, I'm not paying for state farms reassurance.

Yes, and Ricardo Laura has decided that we should pay for that cost as well, because if you want to know what the house of cards really is here, insurance companies have insurance.

Three three.

It takes We just had a Jerry Brown moment, a couple of them.

It take poor guy across the country.

The average got to show you the draw of power for these people is so strong, all of these. You know, someone like Antonio Viragosa, he's got money, he could go, you know, live on an island somewhere with as many reporters from Telemundo as he wants.

But he wants this. He wants to go back to Sacramento in his seventies. I don't know why anyone who means would even want this job. To run this basket case of a state.

Across the country, the average time that it takes to raise rates is three months in the state.

It's more than it was more than a year.

So so what Tony's saying is that everything that voters passed in Prop One O three is bad.

Consumer Watchdog's not gonna like that.

We brought us to some of this.

Now we have Prop one oh three, and so we have an opportunity to obviously, you know, review rate hikes to make sure they're not price gouging, and I will never support price gouging. But when the entire market leads because of those three issues, and disproportionately by the way, then you know you have a problem.

And we should have seen this coming.

So Tony's answer is, yes, you should all be paying a hell of a lot more. Here's what's so weird about his campaign. His campaign is half a loaf on every subject. It is clearly what's going on in Sacramento right now isn't working. Climate change, climate change, climate change, We need to incorporate that into the pricing. I don't know who you make happy with that. It's like what he did with Prop thirty six, and he said crime is a problem. What the legislature wants to do doesn't

You know two things can be true at once.

Oh it's time for the other recent guest of this show. Oh god, what's the opposite of a bump.

A slump?

Yes, Tony Thurman and Tony V both appeared on this show and then went down in the balls.

Correlation does not equal causation. I just thought i'd pointed out.

You know two things can be true at once. The insurance industry has to pay more. They've earned so much money off of Californias, and then to pick up and leave in our moment of greatest need is unacceptable, and I will hold them to account and with more regulation and more pressure at the same time.

We need.

No one wants to even get on the bully pulpit and call out State Farm, which I find to be really strange.

Yeah, why is it. They're willing to go after big tobacco, they're willing to go after big oil, but for whatever reason, State Farm ho if you talk to any of the fire victims, is one of the worst actors there. They're not willing to go after them by name.

At the same time, we need to learn to build differently. Wildfire is part of our new normal in the state of California, and we have to build with materials that will keep our homes safer. We have to build in places that are less.

There is a theory I wonder if the insurance companies are the ones bankrolling all the environmentalist groups. Oh, that's definitely possible. And so if you go after State Farm, you're going after filling the blank and viro group and they don't want any heat with them.

Keep our homes safer, we have to build in places that are less likely to be impacted by fire or by flood. We have to have enough you know, natural burns to address areas that could.

How is Tony Thurman sounding the most common sense on this? He's been in state politics for a long time, unlike many of the top polling candidates who come from Washington.

D C.

Or the private sector.

Could trigger fire. We have to do all the things that we know to keep our community safe.

Why haven't we done that thus far?

I mean, it's wonderful to say we need to do these things, but how do you tangibly do that if we haven't been able to do thus far?

Well, I think the urgency is certainly upon us, and we know that we have to do it. We have to educate homebuilders.

And what he can't say is a good portion of the majority bipartisan, the good portion of the legislature bipartisan is bought and paid for by the insurance industry.

He can't say that, No, we have to educate.

Remember how Ricardo Laura said he wouldn't take any insurance company money when he was running for insurance commissioner and then took insurance company money.

He also takes money from the environmentalists too. I think there's something there.

We have to educate homebuilders and educate homeowners' perspective, homeowners to not put themselves in situations that will keep them unsafe. And it's incumbent on us to do all the prevention that we can because we don't have enough people, power, and resources to keep up with all of the disasters that can affect us. And so again, I see it as holding the insurance industry accountable in this state, California.

What does it say when the lowest polling candidate in this piece has maybe the best answer.

It says, we're screwed.