The insurance landscape in California has become more uncertain as a result of the severe and unrelenting wildfires. The great city fires of the 19th century caused many insurance companies to become insolvent. These large wildfires, even in urban areas, have similar effects on the property insurance market – especially in California.
I had breakfast with Amy Bach of United Policyholders yesterday. We agree that there are no simple answers to the whole problem. People need property insurance that is affordable. But the higher the frequency and severity of losses, the more property insurance must cost. There is no free lunch in insurance economics. Some policyholders may find they can̵
7;t afford to own property because rates have to rise. Banks will not finance properties without fire insurance.I encourage readers to visit the United Policyholders website. An article, Commissioner Lara is proposing a wildfire safety regulation to bring down insurance costsshows an attempt to keep insurance costs affordable while reducing the risk of damage from wildfires:
Insurance Commissioner Ricardo Lara submitted his insurance pricing ordinance to the California Office of Administrative Law that would recognize and reward fire safety and mitigation efforts by homeowners and businesses. The ordinance is the first in the nation to require 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 response agencies.
The Administrative Law Agency has 30 working days to decide whether the proposed regulation meets the requirements of the state’s Administrative Procedures Act. Once approved, the ordinance will be filed with the California Secretary of State and become state law.
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The ordinance incorporates “Safer from Wildfires,” a new wildfire prevention framework created in January by a first-ever partnership between the Department of Insurance and emergency response agencies of 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 retrofitting, along with defensible space greatly increases 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 new wildfire data, these retrofit and landscape requirements provide a strong pathway to structural survivability. CAL FIRE currently funds over three hundred million dollars in local wildfire prevention projects to prepare communities for wildfires, but we know that it will require every resident to do their part to ensure that California is fully protected.’
These risk management initiatives are extremely important. Reducing the frequency and severity of fire risk is the only way we can lower insurance costs in the long term. Merlin Law Group has long been a supporter of United Policyholders. They regularly meet with insurance regulators with a “seat at the table.” There is no other consumer organization like it in the country. Thank God for the great work they do.
Today’s thought
In everyone’s life, at some point, our inner fire goes out. It then bursts into flames from an encounter with another human. We should all be grateful for those people who rekindle the inner spirit.
—Albert Schweitzer
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