On the Defense

The legislative bill introduction deadline was February 21, 2020, which means we now have an initial understanding of the “bad bills” related to wildfires and homeowners insurance the industry will face this year. However, there are also many placeholder bills (i.e., spot bills) that do not yet have substantive language, which may be amended in a manner that negatively affects the insurance industry. PIFC staff will monitor these spot bills to see what emerges.

In particular, PIFC has opposed AB 2367, authored by Assemblymember Lorena Gonzalez. Last year, she authored AB 5, which fundamentally changed the way independent contractors operate in California, but our advocates were able to communicate the pain that would come from changing insurance agents from independent contractors to employees. While we were able to get a carve-out of AB 5 for our agents, it seems Assemblymember Gonzalez has taken aim at insurers who write residential property insurers in 2020.

AB 2367 establishes a task force to develop community and home hardening standards – and also requires an admitted insurer to write or renew a policy for an existing property that is certified by the Task Force. However, the bill does not answer some fundamental questions: who will perform inspections? What are the standards? What does the science actually say about the effectiveness of mitigation and home hardening in a catastrophic wildfire event? We know you don’t want to nonrenew your policyholders. But is forcing you to take on unreasonable risk – indefinitely – really the way to go?

Bills like AB 2367 (Gonzalez) are why we work hard to anticipate legislative threats and monitor bills that are more thoughtful. AB 2167 (Daly) provides a comprehensive solution that will result in increased availability of admitted market insurance with better coverage and lower rates than the FAIR plan, and reduced risk of catastrophic wildfire through home hardening and community mitigation.

PIFC has taken an oppose position to AB 2367 and a support position for AB 2167. Search PIFC position letters here.

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