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Gov. Newsom seeks faster review of insurance rate hikes. What to know

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Gov. Newsom seeks faster review of insurance rate hikes. What to know

With insurers continuing to pull back from the California’s homeowners’ market, Gov. Gavin Newsom wants to speed up the process by which the companies have their requests for rate hikes reviewed.

The governor said Friday that he is backing a bill that would require the Department of Insurance to complete reviews of proposed premium increases within 60 days to halt any more exits from the market. Here’s what to know:

What exactly did the governor say?

Newsom said that immediate steps need to be taken to stabilize the market, which has seen insurers not renew existing policyholders, stop writing new policies or pull out of the market entirely — sending many homeowners to the insurer of last resort, the state’s FAIR Plan, which is now on the hook for more than $300 billion in payouts. Newsom said he was “deeply mindful” of the burdens placed on the plan.

The governor said he had considered issuing an executive order, but instead is proposing a bill that would require the Insurance Department to speed up its review process of premium rate-hike requests.

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“We need to stabilize this market. We need to send the right signals. We need to move,” he said.

Isn’t there already an insurance reform package being hashed out in Sacramento?

Insurance Commissioner Ricardo Lara is holding hearings on his Sustainable Insurance Strategy, a set of comprehensive regulations intended to stabilize rates and make it more attractive for insurers to write homeowners policies, especially in wildfire areas such as hillsides and canyons.

However, these regulations won’t become law until the end of the year — a deadline sought by the governor, assuming it can be met.

“It should not take this long for emergency regulations,” Newsom said. “We can’t wait until December.”

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How would this bill fit into the larger set of reforms?

Lara has reached a grand bargain with the insurance industry to make the market more attractive, though details are still being worked out.

The plan would allow insurers to include the cost of reinsurance they buy to protect themselves from large fires and other catastrophes into premium costs. It also would allow them to set rates using sophisticated algorithms to predict the risk and cost of future fires, rather than just base them on past events. It’s unclear how an insurer’s application for an expedited rate approval this year would fit into the proposed reforms.

Has Lara reacted to the governor’s proposal?

The commissioner tweeted Friday that his department has taken “significant steps forward” to implement his planned reforms but more needs to be done — and that his department is working with the governor and the Legislature “on critical budget language that keeps us on track to get the job done.”

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What do consumer groups have to say?

Jamie Court, president of Consumer Watchdog, said he didn’t understand the proposal, worrying that it would be a “rubber stamp” on proposed rate increases.

He noted that Proposition 103, the landmark 1988 initiative that gives the insurance commissioner authority to review rate hikes, already mandates that they are conducted within 60 days except in certain circumstances. Those circumstances include requests for rate increases exceeding 7% for homeowners insurance, which allow consumers to seek a hearing, or the commissioner’s own decision to conduct a hearing.

What is the insurance industry’s reaction

Rex Frazier, president of the Personal Insurance Federation of California, a trade group of property and casualty insurers, said despite the promise of 60-day rate reviews under Proposition 103, they are taking longer. He said the Insurance Department will often request that insurers waive their rights to a speedy decision or face an administrative hearing, which can lead to extensive delays. However, Frazier withheld comment on the governor’s proposal until the draft language is released.

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What are the next steps?

Newsom’s office will release the draft bill, which will be carried by a member of the Legislature and be included in the process for adopting the state budget, which the Legislature must approve by June 15. Newsom made his remarks Friday in outlining plans for a revised $288-billion budget, which calls for a series of cutbacks to close a nearly $45-billion shortfall.

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Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO

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Heidi O’Neill, Formerly of Nike, Will Be New Lululemon’s New CEO

Lululemon, the yoga pants and athletic clothing company, has hired a former executive from a rival, Nike, as its new chief executive.

Heidi O’Neill, who spent more than 25 years at Nike, will take the reins and join Lululemon’s board of directors on Sept. 8, the company announced on Wednesday.

The leadership change is happening during a tumultuous time for Lululemon, which had grown to $11 billion in revenue by persuading shoppers to ditch their jeans and slacks for stretchy leggings. But lately, sales have declined in North America amid intense competition and shifting fashion trends, with consumers favoring looser styles rather than the form-fitting silhouettes for which Lululemon is best known.

“As I step into the C.E.O. role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” Ms. O’Neill, 61, said in a statement.

Lululemon, based in Vancouver, British Columbia, has also been entangled in a corporate power struggle over the company’s future. Its billionaire founder, Chip Wilson, has feuded with the board, nominated independent directors and criticized executives.

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Lululemon’s previous chief executive, Calvin McDonald, stepped down at the end of January as pressure mounted from Mr. Wilson and some investors. One activist investor, Elliott Investment Management, had pushed its own chief executive candidate, who was not selected.

The interim co-chiefs, Meghan Frank and André Maestrini, will lead the company until Ms. O’Neill’s arrival, when they are expected to return to other senior roles. The pair had outlined a plan to revive sales at Lululemon, promising to invest in stores, save more money and speed up product development.

“We start the year with a real plan, with real strategies,” Mr. Maestrini said in an interview this year. “We make sure decisions are made fast.”

Lululemon said last month that it would add Chip Bergh, the former chief executive of Levi Strauss, to its board to replace David Mussafer, the chairman of the private equity firm Advent International, whom Mr. Wilson had sought to remove.

Ms. O’Neill climbed the organizational chart at Nike for decades, working across divisions including consumer sports, product innovation and brand marketing, and was most recently its president of consumer, product and brand. She left Nike last year amid a shake-up of senior management that led to the elimination of her role.

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Analysts said Ms. O’Neill would be expected to find ways to energize Lululemon’s business and reset the company’s culture in order to improve performance.

“O’Neill is her own person who will come with an agenda of change,” said Neil Saunders, the managing director of GlobalData, a data analytics and consulting company. “The task ahead is a significant one, but it can be undertaken from a position of relative stability.”

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Angry Altadena residents ask officials to halt Edison’s undergrounding work

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Angry Altadena residents ask officials to halt Edison’s undergrounding work

Eaton wildfire survivors’ anger about Southern California Edison’s burying of electric wires in Altadena boiled over Tuesday with residents calling on government officials to temporarily halt the work.

In a letter to the Los Angeles County Board of Supervisors, more than 120 Altadena residents and the town’s council wrote that they had witnessed “manifest failures” by Edison in recent months as it has been tearing up streets and digging trenches to bury the wires.

The residents cited the unexpected financial cost of the work to homeowners and possible harm to the town’s remaining trees. They also pointed out how the work will leave telecommunication wires above ground on poles.

“The current lack of coordination is compounding the stress of a community still reeling from the Eaton Fire, and risks causing further irreparable harm,” the residents wrote.

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The council voted unanimously Tuesday night to send the letter.

Scott Johnson, an Edison spokesman, said Wednesday that the company has been working to address the concerns, including by looking for other sources of funds to help pay for the homeowners’ costs.

“We recognize this community has already faced a number of challenges,” he said.

Johnson said the company will allow homeowners to keep existing overhead lines connecting their homes to the grid if they are worried about the cost.

Edison’s crews, Johnson said, have also been trained to use equipment that avoids roots and preserves the health of trees.

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The utility has said that burying the wires as the town rebuilds thousands of homes destroyed in the fire will make the electrical grid safer and more reliable.

But anger has grown as work crews have shown up unexpectedly and residents learned they’re on the hook to pay tens of thousands of dollars to connect their homes to the buried lines.

Residents have also found the crews digging under the town’s oak and pine trees that survived last year’s fire. Arborists say the trenches could destroy the roots of some of the last remaining trees and kill them.

Amy Bodek, the county’s regional planning director, recently warned Edison that a government ordinance protects oak trees and that “utility trenching is not exempt from these requirements.”

Residents have also pointed out that in much of Altadena, the telecom companies, including Spectrum and AT&T, have not agreed to bury their wires in Edison’s trenches. That means the telecom wires will remain on poles above ground, which residents say is visually unappealing.

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“While our community supports the long-term benefits of moving utilities underground, the current execution by SCE is placing undue financial and planning burdens on homeowners, causing irreparable harm to our heritage tree canopy, and proceeding without adequate local oversight,” the residents wrote.

They want the project halted until the problems are addressed.

Edison announced last year that it would spend as much as $925 million to underground and rebuild its grid in Altadena and Malibu, where the Palisades fire caused devastation.

The work — which costs an estimated $4 million per mile — will earn the utility millions of dollars in profits as its electric customers pay for it over the next decades.

Pedro Pizarro, chief executive of Edison International, told Gov. Gavin Newsom last year that state utility rules would require Altadena and Malibu homeowners to pay to underground the electric wire from their property line to the panel on their house. Pizarro estimated it would cost $8,000 to $10,000 for each home.

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But some residents, who need to dig long trenches, say it will cost them much more.

“We are rebuilding and with the insurance shortfall, our finances are stretched already,” Marilyn Chong, an Altadena resident, wrote in a comment attached to the letter. “Incurring the additional burden of financing SCE’s infrastructure is not something we can or should have to do.”

Other fire survivors complained of Edison’s lack of planning and coordination with residents.

“I’ve started rebuilding, and apparently there won’t be underground power lines for me to connect with in time when my house will be done,” wrote Gail Murphy. “So apparently I’m supposed to be using a generator, and for how long!?”

Johnson said the company has set up a phone line for people with concerns or questions. That line — 1-800-250-7339 — is answered Monday through Saturday, he said.

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Residents can also go to Edison’s office in Altadena at 2680 Fair Oaks Avenue. The office is open Monday to Friday from 8 to 4:30.

It’s unclear if the Eaton fire would have been less disastrous if Altadena’s neighborhood power lines had been buried.

The blaze ignited under Edison’s towering transmission lines that run through Eaton Canyon. Those lines carry bulk power through the company’s territory. In Altadena, Edison is burying the smaller distribution lines, which carry power to homes.

The government investigation into the cause of the fire has not yet been released. Pizarro has said that a leading theory is that a century-old transmission line, which had not carried power for 50 years, somehow re-energized to spark the blaze.

The fire killed at least 19 people and destroyed more than 9,400 homes and other structures.

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Oil Prices Rise as Investors Weigh Cease-Fire Extension

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Oil Prices Rise as Investors Weigh Cease-Fire Extension

Oil prices rose and stocks moved slightly higher on Wednesday as investors tried to make sense of President Trump’s decision to extend the cease-fire with Iran despite doubts about the status of another round of peace talks.

An adviser to Mohammad Bagher Ghalibaf, the influential speaker of the Iranian Parliament, dismissed the cease-fire announcement, saying that it had “no meaning.” He equated the U.S. naval blockade with bombings, with commercial vessels coming under attack near the Strait of Hormuz, the crucial shipping lane that has been at the center of a growing energy crisis.

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