Wednesday, 10 October 2007
Governor Schwarzenegger Signs Earthquake Insurance Bill
California Governor Arnold Schwarzenegger signed a bill into law last week to increase funding for the California Earthquake Authority (CEA). The CEA provides earthquake insurance through participating private companies. The main provision of the bill requires the participating insurers to contribute $1.3 billion into a statewide pool as a financial backstop in the event of a major earthquake.
The bill, written by state Senator Mike Machado, was the best compromise that could be worked out with the insurance companies, reported the Associated Press and the San Francisco Gate.
Previously, insurance companies were required to contribute $2.2 billion. But that commitment may have driven companies out of the state explained Senator Machado. He also said that without the compromise of $1.3 billion, policyholders with CEA earthquake coverage may have had rates increase by 20%.
The CEA now has around $2.7 billion in cash reserves, including the funding from the insurance companies and other sources.
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