Home Insurance Bill
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* Robert Stein (Letters, June 8) is confused concerning the intent of Sen. John R. Lewis’ (R-Orange) pending earthquake legislation. The bill addresses a single problem: No major insurance company sells home insurance in California today. His legislation will make homeowners’ insurance more widely available.
It does not address earthquake [insurance] availability.
Home insurance has become an endangered species because, by law, each home policy sold must offer earthquake insurance. This linkage creates a formidable problem for insurance companies because earthquake insurance has proved to be a monumental money loser.
The insurance industry has collectively taken in about $3 billion in earthquake premiums and paid out over $20 billion in related losses during the past 25 years.
Under normal circumstances, insurers would raise rates to bring premiums in line with losses. In California, Proposition 103 prevents this logical reaction.
That’s why Robert Stein’s home insurer, 20th Century, is becoming extinct in California.
Sen. Lewis’ bill seeks to make home insurance available to more people and, as such, merits support. It does not purport to solve the earthquake [insurance] availability crisis.
The most credible way to make earthquake insurance more available is to repeal the price controls contained in Proposition 103.
ROBERT TAYLOR HEINEMAN
Laguna Niguel
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