State Insurance Commissioner Ricardo Lara will enforce new insurance pricing regulations he drafted, recognizing and rewarding homeowners and businesses for wildfire safety and mitigation efforts.
Commissioner Lara’s regulations are the first in the nation requiring insurance companies to offer consumer discounts under the Safer from Wildfires framework created by the California Department of Insurance in partnership with emergency preparedness agencies of State. The regulation is now state law and is included in the California Code of Regulations.
“Protecting Californians from deadly wildfires means everyone is doing their part, including insurance companies by rewarding consumers for being safer from wildfires,” Lara said in a press release. “The reality of climate change drives my determination to help communities better prepare, help our firefighters save lives, and help more Californians find insurance they can afford.”
Lara’s Settlement requires insurance companies to submit new rate filings incorporating wildfire safety standards created by the Department of Insurance and establish a process to communicate wildfire risk determinations to residents and to businesses within 180 days. The press release notes that transparency is an important benefit of this regulation, requiring insurance companies to provide consumers with the “wildfire risk score” of their property and creating a right to appeal this score. .
In 2019, insurance companies representing 7% of the residential market gave insurance discounts. Today, that figure has risen to 40%, according to data from the Department of Insurance. When this new regulation is fully implemented, it is expected that 100% of the residential and commercial market will be aligned with the Safer from Wildfires framework.
Lara asked the Department of Insurance to draft the regulations to protect consumers and improve competition in the marketplace after hearing firsthand from consumers and business owners about their frustration with insurance companies that did not factor mitigation into their pricing plans. At town hall meetings in more than 38 counties and a vast 2020 Department of Insurance wildfire investigation hearingconsumers testified that their homes and businesses were subject to “wildfire hazard scores” that many were unaware of and had no right to appeal if they were inaccurate.
According to Chief Daniel Berlant, Cal Fire’s assistant director, Community Wildfire Preparedness and Mitigation, home strengthening renovations, along with defensible space, greatly increase a home’s chances of surviving a wildfire. “Using the latest fire science and recent wildfire data, these renovation and landscaping requirements provide a solid path to structural survivability,” he says, adding that Cal Fire is currently funding more than $3 million in local wildfire prevention projects to prepare communities for wildfires.
New wildfire safety regulations require insurance companies to submit new rates that recognize the benefits of safety measures such as improved roofs and windows, defensible space and community programs such as Firewise USA and the Fire Risk Reduction Community designation developed by the state Board of Forestry and Fire Protection, which currently includes Los Angeles, Santa Barbara, and Butte counties, as well as local cities and districts.