Insurance Commissioner Lara takes step to increase insurance availability in wildfire-distressed areas

The California Department of Insurance has sent the final wildfire catastrophe modeling regulation to the Office of Administrative Law for approval, according to a Thursday afternoon announcement by Insurance Commissioner Ricardo Lara.

By requiring insurance firms to make previously unheard-of coverage obligations, this rule seeks to reinforce Proposition 103 by stabilizing the insurance market and increasing options for business and residential owners in high-risk areas for wildfires. The submission comes after months of public comment, expert consultations, and several Department workshops and public hearings.

Customers are looking for answers to the insurance situation in our state. Lara stated on Thursday that her new rule will increase the availability of insurance throughout the state. Technology will help us identify the true risks and precisely price rates that reflect mitigation and hardening efforts as California faces more severe climate consequences.

Fire agencies in Vallejo, Solano County, and the state have been busier than ever in recent years.

The state had three of the most destructive fires in its history just three years ago. The Dixie Fire, the second largest, destroyed 963,309 acres in Butte, Plumas, Lassen, Shasta, and Tehama. Vallejo helped with this fire as well as the Caldor Fire, which is the 15th largest in state history with a total burned area of 221,835 acres.

Lara received praise from State Senator Bill Dodd for the new rules on catastrophic modeling, which may increase insurance availability in regions that are vulnerable to wildfires.

Dodd expressed gratitude to Commissioner Lara for advancing this. There isn’t a magic solution for this complicated issue, but this is one aspect of the equation that can be useful. Holding insurance companies responsible for renewing and creating new policies will be crucial.

Dodd has long advocated for preventing wildfires. Governor Gavin Newsom signed his legislation earlier this year to improve the State Board of Fire Services’ operations, which serves as the California State Fire Marshal’s advisory body, in order to help California avoid and prepare for wildfires.

With further suggestions, such as Senate Bill 1215, which seeks to enhance the functioning of the 18-member State Board of Fire Services, Dodd has persisted in advocating for wildfire legislation. When a regular member is unable to attend, SB 1215 permits ex-officio members of the board in charge of advancing the state’s fire safety initiatives to act as proxies. This protects against impending risks to life and property and tackles the challenge of securing quorums.

Climate-driven wildfires are becoming more devastating and frequent in California, therefore it’s critical that we respond quickly and forcefully, Dodd stated in July. Now that this bill has been signed, we can move quickly to handle the most urgent demands, like allocating firefighting resources.

Insurance companies are not legally obligated to provide coverage in locations that are prone to wildfires, but they are permitted to increase premiums for consumers, businesses, and homes under Prop. 103. As part of Commissioner Lara’s broader Sustainable Insurance Strategy, this new wildfire catastrophe modeling regulation requires insurers to expand the range of policies they sell in underserved areas in order to use catastrophe modeling in ratemaking.

In addition to guaranteeing that insurance companies pledge to increase their writings of these wildfire-distressed properties throughout the state, giving insurers the capacity to more accurately assess risk enables them to more accurately price insurance and expand coverage for homeowners and businesses that reside and operate in wildfire-prone areas.