Taking the Heat – Wildfires and Homeowner’s Insurance

On February 12th, Rex and our Senior Legislative Advocate Seren Taylor testified at an informational hearing for the Senate Insurance Committee, titled Wildfires and Homeowners Insurance: Availability in High Risk Communities. Testifying alongside Rex and Seren were representatives from the California Department of Insurance (CDI). While representatives from CDI tried to focus on the Insurance Commissioner’s town halls and people’s emotions regarding non-renewals, they did not have strong arguments, data, or any concrete solutions to offer.  Committee members seemed unimpressed with CDI and asked them a lot of questions focused on the lack of any meaningful statewide mitigation standards or data to support their effectiveness in reducing property damage and loss in a catastrophic fire.

Contrasted with CDI’s lack of data and concrete solutions, PIFC’s arguments and related data/graphics were well received by the Committee. Essentially, this is a basic economics issue – there’s demand, but no seller because the regulator is not allowing adequate prices.  If balance is restored the availability issue will resolve itself more quickly.

The Chair of Senate Insurance, Senator Rubio, seemed skeptical of some of CDI’s remarks and promised to host two more informational hearings in the coming months. Though, now as health crisis impacts the legislature, PIFC will pivot to address this issue no matter how it develops.

In the meantime, PIFC staff is monitoring a bill by the Chair of the Assembly Insurance Committee, Assemblymember Tom Daly. It offers a nuanced and thoughtful market solution to the temporary market problem of availability/affordability of homeowners insurance in high-risk areas. In AB 2167 (Daly), insurers will be allowed to create an “insurance market action plan” (IMAP) for communities where homeowner’s insurance is hard to get. IMAP spells out the combination of insurance rates and home eligibility requirements needed to support a mandate for an insurance company to issue and renew more policies in high risk areas.

Leave a Reply

Your email address will not be published. Required fields are marked *