Clear
79.2 ° F
Full Weather
Sponsored By:

Regulatory Changes Planned To Address Fire Insurance Crisis

Sponsored by:

Sacramento, CA — California Insurance Commissioner Ricardo Lara is putting forward a plan to reform fire insurance regulations, and it has backing from the governor and the head of the Farm Bureau.

Insurers operating in California are currently free to decide where they want to offer policies, leading to many homes in high-risk areas being denied.

Under Lara’s insurance regulatory reforms, larger companies would be required to start offering policies to no less than 85% of the properties in the distressed regions of the statewide market share.

Smaller companies, new entrants, who cannot meet the 85% threshold, will need to expand their writing of policies by 5% in distressed areas. Or they can increase their numbers by 5% by directly taking customers out of the Fair Plan.

Those who comply will be allowed to take advantage of catastrophe modeling, which has been requested by the industry for several years, and takes into account historical data that looks at projected risk and losses, when writing new policies.

Lara says, “Whether you live in the Sierra or the foothills, along the coast or in a city, California is not a ‘one-size-fits-all’ place, and we need to be inclusive.”

He adds, “We are enacting major reforms that will result in insurance companies writing more policies, so if you are stuck on the Fair Plan because of your unique wildfire risk, there will be help for you.”

Governor Gavin Newsom is praising the changes, adding, “It will help homeowners who face higher threats of wildfire get the coverage they need, while also easing pressure off of the state’s fair plan.”

The President of the Farm Bureau, Shannon Douglas, is also in favor the action, adding, “Competition is the first step to guide the market to a place where pricing reflects ongoing wildfire mitigation efforts undertaken by Californians, including by our farmers and ranchers who work to remove fuels and safeguard properties. Our productive agricultural lands provide important buffers that can reduce the risk of catastrophic fire events. We hope our members can obtain comprehensive, affordable coverage through improved insurance offerings that recognize their contributions to protecting California from wildfires.”

The regulatory changes are going through a review process and could be implemented by the end of the year.

Feedback