The California Nonprofit Insurance Alliance blames the new law for their decision.
CALIFORNIA, USA—Foster Family Agency has announced that one of its major insurance companies will no longer renew its policies in the state as California’s insurance crisis continues.
“You really need that insurance, especially to run a foster care agency,” said Tony Yadon, CEO of Parents by Choice.
Parents by Choice is a Stockton-based nonprofit organization dedicated to developing youth in the welfare system. Insurance is required to protect your agency from various claims, including sexual misconduct insurance. The Nonprofit Insurance Alliance of California (NIAC) is the provider.
“This is a very expensive part of our business, and we have to make sure we’re not only getting the best insurance, but also the best price,” Yadon said.
In September, NIAC condemned AB 2496 and announced that it would not update the policies of all California-based agencies. The governor recently signed the bill into law. The bill, authored by Rep. Gail Pellerin (D-Santa Cruz), aims to protect children from any wrongdoing in the foster care system by holding foster care facilities accountable. Therefore, NIAC believed that this increased risk to the agency.
“I was very concerned. NIAC appears to be one of the only insurance companies left in California,” Yadon said.
You have four months left until your parents by Choice policy ends.
“We either have to close down the foster care system and no longer serve these young people, or we have to find an insurance company,” Yadon said.
The California Alliance, an organization that provides policy and advocacy support to agencies, says that if foster care agencies were able to find another insurance company, the costs would be much higher.
“For most providers, it’s probably easy to quadruple your premiums,” said Christine Stoner-Mertz.
NIAC’s CEO issued the following statement to ABC10:
“The Legislature passed the original provisions of AB 2496, with some changes to ensure that the law applied fairly to foster family agencies, and that the county was not responsible for any misconduct or negligence on the part of the county, or for unforeseen and random criminal acts by third parties. NIAC intends to resume providing these important coverages to California foster family agencies for things beyond their control.
Although we have spent a great deal of time and effort ensuring that FFA’s insurance coverage continues uninterrupted, the plaintiff’s attorney believes that the provisions of AB 2496 protect the foster child from liability for damages caused by FFA’s own negligence or tort. falsely claimed that the ability to recover would be limited. That was not the case with AB 2496.
We have asked plaintiffs’ attorneys to point to the provisions of AB 2496 that limit foster children’s ability to recover from FFA for their own negligence, but they are unable to point to anything to that effect. did. When AB 2496 was passed without the necessary provisions, NIAC determined that the judicial system could no longer be used to protect FFAs who had done nothing wrong. The reason FFA is no longer insured is that the judicial system has become less like a system for getting justice and more like a lottery system that rewards a few with big wins (regardless of who is at fault). It’s a body. ”
Azm. Pellerin provided the following comment to ABC10.
“AB 2496 was introduced in June in response to an urgent and dire situation affecting 9,700 of the most vulnerable children in foster care.
The bill was considered in four committees, passed by both chambers, and amended to reflect feedback as the bill moved through the legislative process. My office and I have conducted thorough and collaborative engagement with stakeholders. This is evidenced by the lack of opposition to the final version of AB 2496.
Foster Family Agencies play a critical role in the care of California’s most vulnerable children. I introduced AB 2496 to ensure that Foster Family Agencies (FFAs) do not lose their liability insurance this year, leading to the displacement of the 9,700 children in their care. Unfortunately, the Nonprofit Insurance Alliance of California (NIAC), which provides insurance to 90% of FFAs, announced in late August that it would not be renewing insurance coverage for all FFAs in the state. NIAC’s reinsurer said it will no longer be able to reinsure NIAC if it continues to insure FFA due to increased liability. The lack of renewal means 9,700 foster children will be removed from foster care and returned to county custody and care. Unfortunately, the county is not equipped to adequately and appropriately care for these children.
We also want to emphasize that AB 2496 is a temporary solution to keep our most vulnerable foster children in their current homes. We are grateful that Governor Gavin Newsom signed AB 2496. I hope that all stakeholders can work together between now and January 2025 to introduce emergency legislation to ensure the continued operation of FFA in California. I also join Insurance Secretary Ricardo Lara’s call to action for all property and casualty insurance companies doing business in California to find ways to provide coverage to FFA and help stabilize the state’s foster care system. Participate in ”
The California Department of Human Services provided the following statement to ABC10.
“AB 2496 was recently signed into law, and the Department is in the process of implementing the law. Family Foster Agencies are an integral part of California’s continuum of care serving foster youth. We will continue to work closely with the county, health care providers and other stakeholders to support appropriate placement options and delivery of critical services. ”
More: ABC10’s ‘To The Point’ team investigates California’s home insurance crisis and solutions
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