Insurance Commissioner Ricardo Lara submitted his insurance pricing regulation to the California Office of Administrative Law that would recognize and reward wildfire safety and mitigation efforts made by homeowners and businesses. The regulation is the first in the nation requiring insurance companies to provide discounts to consumers under the Safer from Wildfires framework created by the California Department of Insurance in partnership with state emergency preparedness agencies.
The Office of Administrative Law has 30 working days to determine whether the proposed regulation satisfies the requirements of the state’s Administrative Procedure Act. Once approved, the regulation text will be filed with the California Secretary of State and become state law.
“My Department is laser-focused on doing everything we can to protect consumers and hold insurance companies accountable,” said Commissioner Lara. My groundbreaking regulation will help more Californians find insurance they can afford. It aligns insurance discounts with fire safety actions being expedited by our state emergency leaders and local governments. And, most importantly, it will save lives by helping California become safer from wildfires.”
This regulation is part of a comprehensive solution that Commissioner Lara initiated after taking office to protect consumers from climate change-intensified wildfires. The Department is submitting this regulation as it recognizes National Preparedness Month in September.
Regulations follow extensive public input and Safer from Wildfires partnership with Governor Gavin Newsom’s Administration
Commissioner Lara directed the Department of Insurance to write regulations to protect consumers and improve market competition after hearing first-hand from consumers about their frustration with insurance companies that did not consider mitigation in their rating plans. Following town hall meetings in more than 38 counties and an extensive “Safer from Wildfires,”investigatory hearing in 2020, Commissioner Lara took what he learned from Californians to shape these rules that will promote a fair, transparent, and safer insurance market. In October 2021, Commissioner Lara shared an initial version of the text of regulation. Following further public input, Commissioner Lara formally proposed his regulations in February of 2022.
The regulation incorporates “Safer from Wildfires,” a new framework of wildfire safety measures created in January by a first-ever partnership between the Department of Insurance and the emergency preparedness agencies in Governor Newsom’s Administration, including the California Department of Forestry and Fire Protection (CAL FIRE), the Governor’s Office of Emergency Services (CalOES), the Governor’s Office of Planning and Research, and the California Public Utilities Commission.
“Home Hardening retrofits, along with Defensible Space significantly increase a home’s chance of surviving a wildfire,” said Chief Daniel Berlant, CAL FIRE Deputy Director of Community Wildfire Preparedness & Mitigation. “Using the latest fire science and recent wildfire data, these retrofits and landscaping requirements provide a strong path to structure survivability. CAL FIRE is currently funding over three hundred million dollars in local wildfire prevention projects to prepare communities against wildfire, but we know it will take every resident doing their part to ensure California is fully protected.”
Regulations will drive down costs and create transparency for consumers
Once approved, the regulation will require all insurance companies to submit new rates that recognize the benefit of safety measures such as upgraded roofs and windows, defensible space, and community-wide programs such as Firewise USA and the Fire Risk Reduction Community designation developed by the state’s Board of Forestry and Fire Protection, which currently includes the counties of Los Angeles, Santa Barbara, and Butte as well as cities and local districts.
Transparency is another important benefit of this regulation, by requiring insurance companies to provide consumers with their property’s “risk score” and creating a right to appeal that score.
“My regulation is the result of listening closely to the needs of consumers and businesses and crafting common-sense, lasting solutions that strengthen our ability to protect Californians from the threat of climate change-intensified wildfires,” said Commissioner Lara.
The Safer from Wildfires regulation is part of a larger solution he is pursuing for consumers and wildfire survivors that includes working to increase insurance protections and market competition to help protect consumers. Commissioner Lara’s actions since taking office in 2019 include:
- Protecting more than 4 million homeowners from non-renewal or cancellation of insurance following declared wildfire emergencies, in order to speed up community recovery.
- Sponsoring new insurance protections signed into law by Governor Newsom — despite opposition from insurance companies — that will mean larger payouts for some consumer claims, less red tape from insurance companies, and more help for people under evacuation orders.
- Ordering the FAIR Plan, the state’s insurer of last resort, to offer a more comprehensive homeowners policy as an option, which a judge recently upheld, as well as expanding residential and commercial coverage limits for the first time in 25 years to keep pace with increased costs.