California Today: Earthquake Insurance Sales Spiked in 2017
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For years, scientists have warned that we are due for a major earthquake. But getting Californians to buy earthquake insurance was a difficult sell — only around 10 percent of households in the state have it.
Then came the natural disasters of 2017. Glenn Pomeroy, chief executive of the California Earthquake Authority, the nonprofit organization that oversees the insurance program, says that fires and mudslides in California, the flooding in Houston, and the earthquakes in Mexico all helped persuade many more Californians to sign up.
Last year the earthquake authority saw a record increase of 90,000 new customers, compared with an average annual increase of 7,000 over the previous decade.
The “horrible run of natural catastrophes,” Mr. Pomeroy said in an interview, “crystallized people’s thinking about the need to be protected.”
Also helping lure new customers were more aggressive advertising by the authority and the introduction of new offerings, including lowering the minimum deductible to 5 percent of a home’s value, from 10 percent.
All of this would seem to be good news for California — more people insured presumably means a steadier recovery after an earthquake.
Yet the increase came with unintended consequences. For reasons related to the way the earthquake authority is capitalized, the sharp increase in customers means the authority has to buy more reinsurance — the insurance that insurance companies buy for themselves to spread risk. This means the authority will be forced to raise rates around 2 to 4 percent annually, according to Mr. Pomeroy.
“We are on the horns of a dilemma,” Mr. Pomeroy said. “If we keep growing at rates that we are now growing there’s going to come a day when we are going to have start raising rates to the point where it will then become unaffordable again.”
Last month in a speech to the authority’s governing board, Mr. Pomeroy sketched out an idea for a “backstop” that would impose an “extremely small” assessment on all Californian homeowners with insurance, not just those with earthquake insurance, in the case of a very large earthquake. That would help bring rates down, he said. He plans to make the case to the state legislature soon.
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• Major stock indexes suffered another steep drop shortly before the markets closed. The decline pushed the Standard & Poor’s 500-stock index down more than 10 percent from its peak — meaning that the market is technically in “correction” territory. [The New York Times]
• The criminal investigation into Representative Duncan D. Hunter, Republican of San Diego, is intensifying as a grand jury questions former aides about whether he improperly diverted political funds for personal use. [Politico]
• Assemblywoman Cristina Garcia, who has sharply criticized the rampant sexual harassment at the state Capitol, has herself been accused of sexual misconduct. [Politico]
• “One officer. Four criminals. Thirty-seven shots fired”: A new podcast follows a reporter’s investigation into questionable shootings by a Los Angeles County sheriff’s deputy. [KPCC]
• A sheriff’s deputy who was wounded 24 years ago when he was shot in the head during a traffic stop has died as a result of injuries he suffered in the shooting. [City News Service via NBC4]
• President Trump has formally nominated Charles P. Rettig, a Beverly Hills lawyer, to lead the Internal Revenue Service. Mr. Rettig has long specialized in defending people and companies against the tax agency. [The New York Times]
• Tesla reported losses of $771 million in the fourth quarter as it scrambles to ramp up production of its highly anticipated Model 3 sedan. [The New York Times]
• Twitter, meanwhile, reported its first quarterly profit since going public in 2013. [The New York Times]
• Kimberly-Clark said it planned to close a plant in Fullerton that employs more than 300 people. [The Orange County Register]
• Officials in Santa Barbara County have eliminated the word “voluntary” from the language they use when issuing evacuation orders. Many residents remained in Montecito despite being warned about a storm that caused deadly mud and debris flows. [KPCC]
• One entrepreneurial girl scout is earning praise for selling cookies outside a San Diego marijuana dispensary. [The New York Times]
• John Perry Barlow, a Republican politician, lyricist for the Grateful Dead and a leading defender of an unfettered internet, died on Wednesday at his home in San Francisco. He was 70. [The New York Times]
• After a strong showing on National Signing Day, the University of Southern California once again secured one of the top recruiting classes in college football, experts are saying. [The Orange County Register]
• And while we’re in the world of sports, the Lakers acquired the former All-Star guard Isaiah Thomas from the Cleveland Cavaliers in the final hours before the N.B.A.’s annual trade deadline. [The New York Times]
And Finally …
When Los Angeles police officers made a recent traffic stop, they noticed some odd items in the back seat of the vehicle.
Several tightly wrapped “aluminum tubes” were in plain view, a police detective said. The officers inquired as to what the tubes were. And soon, they found out.
“Fourteen ‘burritos’ and a gun off the streets thanks to #LAPD Rampart officers,” the police announced on Twitter this week.
“But these aren’t your typical burritos,” the police continued — nothing driven south from San Francisco’s Mission District or brought across town from Al & Bea’s.
These so-called burritos, the police said, “were filled with meth!”
News media reports say the methamphetamine burritos weighed in at more than 25 pounds and note that, yes, the police did make an arrest.
California Today goes live at 6 a.m. Pacific time weekdays. Tell us what you want to see: CAtoday@nytimes.com.
California Today is edited by Julie Bloom, who grew up in Los Angeles and graduated from U.C. Berkeley.