State Aims To Increase Fire Insurance Options: Higher Prices Likely
Sacramento, CA — The State of California is going to implement changes designed to make it more lucrative for companies to provide fire insurance, but it will also likely increase the prices of plans.
As insurers are increasingly denying policies or deciding to exit regions of the state entirely, Insurance Commissioner Ricardo Lara announces that new rules will be written to allow insurers to start taking into account climate change and other external factors. Unlike many other states, currently, California does not let insurance companies consider future risk (like fire/climate) when writing policies, and can only consider what has happened on that property in the past. The rule has led to insurers leaving various fire-prone parts of the state entirely, including many counties in the Mother Lode.
Lara made the announcement hours after Governor Gavin Newsom signed an Executive Order calling for the Insurance Commissioner to take swift regulatory action to strengthen California’s insurance marketplace.
The change will likely mean much higher rates for many Californians than they were paying for insurance before companies left the area. But, it could also mean fewer people forced to rely on the Fair Plan.
“We are at a major crossroads on insurance after multiple years of wildfires and storms intensified by the threat of climate change,” says Lara. “I am taking immediate action to implement lasting changes that will make Californians safer through a stronger, sustainable insurance market. The current system is not working for all Californians, and we must change course.”
Governor Gavin Newsom also put out a statement, “This is yet another example of how climate change is directly threatening our communities and livelihoods. It is critical that California’s insurance market works to protect homes and businesses in every corner of our state.”
The change is also being praised by Senate Republican Minority Leader, Brian Jones. He says, “The people of California need a stable insurance market and today’s executive order, along with the commissioner’s plan of action, is a step towards stabilizing the market,”
