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California issues landmark rules to improve home insurance market

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California issues landmark rules to improve home insurance market

Landmark regulations intended to encourage insurers to write more policies in risky wildfire neighborhoods through the use of complex computer models were released Friday by the state.

Under new rules intended to stabilize California’s troubled home insurance market, insurers will be able to set rates by drawing on a wide swath of meteorological, geographic and other data in establishing rates, rather than largely relying on historical losses.

The insurance industry argued the change was imperative given global warming’s role in a number of wildfires, including in 2017 and 2018 when thousands of homes burned down. In setting their rates, insurers also must account for efforts to make properties fire resistant.

“With our changing climate we can no longer look to the past. We are being innovative and forward-looking to protect Californians’ access to insurance,” Insurance Commissioner Ricardo Lara said in a statement.

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The new regulations — a central element of Lara’s Sustainable Insurance Strategy — drew support from the industry and others, including farm and environmental groups, but a mixed response from consumer advocates. Los Angeles group Consumer Watchdog contends that the computer models will be a “black box” that will lead to sharp premium hikes.

The regulations that take effect Jan. 2 arose out of a broad agreement Lara reached with the industry that gave insurers regulatory concessions, including the use of the computer models, in exchange for a commitment by large insurers such as State Farm, Farmers and Allstate to write policies in neighborhoods prone to wildfires equivalent to 85% of their statewide market share. That would mean, for example, an insurer with a 10% share of the state’s homeowners insurance market would have to cover 8.5% of the homes in riskier neighborhoods as identified by the department. No such requirement currently exists.

The changes come as residents living in mountainous and hillside neighborhoods have found insurance harder to come by, forcing them to buy bare-bones policies from the FAIR Plan, the state’s insurer of last resort, which has seen its risk exposure mushroom from $153 billion in 2020 to $458 billion as of September.

The regulations establish a process by which the computer models, which are developed by companies such as publicly traded Verisk Analytics, can be reviewed by the state and the public. The department also said it has hired an expert in a newly created position to oversee the process of “examining model integrity and ensuring public review.”

Consumer Watchdog has argued that the review process will still allow the modeling companies and their client insurance companies to keep essential elements of the proprietary models out of the public’s eye, violating the public review provisions of Proposition 103, the 1988 initiative spearheaded by the group that rewrote the state’s insurance regulations.

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It also contends there are loopholes that will allow insurers to skirt the 85% coverage threshold.

“Consumers should expect large rate hikes but not more insurance policies sold under the new rules,” Carmen Balber, executive director of Consumer Watchdog, said in a statement.

Michael Soller, Lara’s chief spokesperson, disputed the criticisms and said the department’s regulatory review process gives it the authority to prevent unwarranted rate hikes and to ensure that insurers are making progress in meeting the 85% coverage goal.

“We don’t get this done unless we have companies writing policies. If you don’t write the policies, you don’t use the tools,” he said.

Amy Bach, executive director of San Francisco group United Policyholders, acknowledged there was “wiggle room” in the regulations regarding the coverage threshold, but she expected there would be negotiations as insurers file for rate hikes and are pushed to meet the 85% figure.

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“The principle is there, the concept is out there, the deal is out there, and honestly, there’s no other solutions on the horizon that are anywhere close,” she said.

The department noted support from the Environmental Defense Fund, which was quoted stating the models “are essential for modeling perils like flood and wildfire that are now worsening as the planet warms.” Also cited was the California Farm Bureau, which said the models should increase insurance access for farmers.

The American Property Casualty Insurance Assn., a national trade association representing home, auto and business insurers, released a statement that called California’s current insurance regulations “outdated” and “too slow to respond to rapidly evolving conditions.”

“California will continue to have a robust regulatory and rate approval process that guarantees that rates reflect the actual cost of covering claims. We look forward to working with [the department] to implement these new regulations and make sure they are efficient and workable,” it said.

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Nike to Cut 1,400 Jobs as Part of Its Turnaround Plan

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Nike to Cut 1,400 Jobs as Part of Its Turnaround Plan

Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.

In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”

“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”

Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.

In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.

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The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.

“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.

Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.

The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.

Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.

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Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.

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Senate committee kills bill mandating insurance coverage for wildfire safe homes

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Senate committee kills bill mandating insurance coverage for wildfire safe homes

A bill that would have required insurers to offer coverage to homeowners who take steps to reduce wildfire risk on their property died in the Legislature.

The Senate Insurance Committee on Monday voted down the measure, SB 1076, one of the most ambitious bills spurred by the devastating January 2025 wildfires.

The vote came despite fire victims and others rallying at the state Capitol in support of the measure, authored by state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes the Eaton fire zone.

The Insurance Coverage for Fire-Safe Homes Act originally would have required insurers to offer and renew coverage for any home that meets wildfire-safety standards adopted by the insurance commissioner starting Jan. 1, 2028.

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It also threatened insurers with a five-year ban from the sale of home or auto insurance if they did not comply, though it allowed for exceptions.

However, faced with strong opposition from the insurance industry, Pérez had agreed to amend the bill so it would have established community-wide pilot projects across the state to better understand the most effective way to limit property and insurance losses from wildfires.

Insurers would have had to offer four years of coverage to homeowners in successful pilot projects.

Denni Ritter, a vice president of the American Property Casualty Insurance Assn., told the committee that her trade group opposed the bill.

“While we appreciate the intent behind those conversations, those concepts do not remove our opposition, because they retain the same core flaw — substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk,” she said.

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In voting against the bill Sen. Laura Richardson, (D-San Pedro), said: “Last I heard, in the United States, we don’t require any company to do anything. That’s the difference between capitalism and communism, frankly.”

The remarks against the measure prompted committee Chair Sen. Steve Padilla, (D-Chula Vista), to chastise committee members in opposition.

“I’m a little perturbed, and I’m a little disappointed, because you have someone who is trying to work with industry, who is trying to get facts and data,” he said.

Monday’s vote was the fourth time a bill that would have required insurers to offer coverage to so-called “fire hardened” homes failed in the Legislature since 2020, according to an analysis by insurance committee staff.

Fire hardening includes measures such as cutting back brush, installing fire resistant roofs and closing eaves to resist fire embers.

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Pérez’s legislation was thought to have a better chance of passage because it followed the most catastrophic wildfires in U.S. history, which damaged or destroyed more than 18,000 structures and killed 31 people.

The bill was co-sponsored by the Los Angeles advocacy group Consumer Watchdog and Every Fire Survivor’s Network, a community group founded in Altadena after the fires formerly called the Eaton Fire Survivors Network.

But it also had broad support from groups such as the California Apartment Association, the California Nurses Association and California Environmental Voters.

Leading up to the fires, many insurers, citing heightened fire risk, had dropped policyholders in fire-prone neighorhoods. That forced them onto the California FAIR Plan, the state’s insurer of last resort, which offers limited but costly policies.

A Times analysis found that that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls from 2020 to 2024 nearly doubled from 14,272 to 28,440. Mandating coverage has been seen as a way of reducing FAIR Plan enrollment.

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“I’m disappointed this bill died in committee. Fire survivors deserved better,” Pérez said in a statement .

Also failing Monday in the committee was SB 982, a bill authored by Sen. Scott Wiener, (D-San Francisco). It would have authorized California’s attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. It was opposed by the oil and gas industry.

Passing the committee were two other Pérez bills. SB 877 requires insurers to provide more transparency in the claims process. SB 878 imposes a penalty on insurers who don’t make claims payments on time.

Another bill, SB 1301, authored by insurance commissioner candidate Sen. Ben Allen, (D-Pacific Palisades), also passed. It protects policyholders from unexplained and abrupt policy non-renewals.

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How We Cover the White House Correspondents’ Dinner

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How We Cover the White House Correspondents’ Dinner

Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.

Politicians in Washington and the reporters who cover them have an often adversarial relationship.

But on the last Saturday in April, they gather for an irreverent celebration of press freedom and the First Amendment at the Washington Hilton Hotel: The White House Correspondents’ Association dinner.

Hosted by the association, an organization that helps ensure access for media outlets covering the presidency, the dinner attracts Hollywood stars; politicians from both parties; and representatives of more than 100 networks, newspapers, magazines and wire services.

While The Times will have two reporters in the ballroom covering the event, the company no longer buys seats at the party, said Richard W. Stevenson, the Washington bureau chief. The decision goes back almost two decades; the last dinner The Times attended as an organization was in 2007.

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“We made a judgment back then that the event had become too celebrity-focused and was undercutting our need to demonstrate to readers that we always seek to maintain a proper distance from the people we cover, many of whom attend as guests,” he said.

It’s a decision, he added, that “we have stuck by through both Republican and Democratic administrations, although we support the work of the White House Correspondents’ Association.”

Susan Wessling, The Times’s Standards editor, said the policy is a product of the organization’s desire to maintain editorial independence.

“We don’t want to leave readers with any questions about our independence and credibility by seeming to be overly friendly with people whose words and actions we need to report on,” she said.

The celebrity mentalist Oz Pearlman is headlining the evening, in lieu of the usual comedy set by the likes of Stephen Colbert and Hasan Minhaj, but all eyes will be on President Trump, who will make his first appearance at the dinner as president.

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Mr. Trump has boycotted the event since 2011, when he was the butt of punchlines delivered by President Barack Obama and the talk show host Seth Meyers mocking his hair, his reality TV show and his preoccupation with the “birther” movement.

Last month, though, Mr. Trump, who has a contentious relationship with the media, announced his intention to attend this year’s dinner, where he will speak to a room full of the same reporters he often derides as “enemies of the people.”

Times reporters will be there to document the highs, the lows and the reactions in the room. A reporter for the Styles desk has also been assigned to cover the robust roster of after-parties around Washington.

Some off-duty reporters from The Times will also be present at this late-night circuit, though everyone remains cognizant of their roles, said Patrick Healy, The Times’s assistant managing editor for Standards and Trust.

“If they’re reporting, there’s a notebook or recorder out as usual,” he said. “If they’re not, they’re pros who know they’re always identifiable as Times journalists.”

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For most of The Times’s reporters and editors, though, the evening will be experienced from home.

“The rest of us will be able to follow the coverage,” Mr. Stevenson said, “without having to don our tuxes or gowns.”

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