Homeowners in areas at high risk of wildfires may soon have an easier time securing insurance coverage under a new proposal released by the California Department of Insurance. The plan aims to encourage insurance companies to write more policies for homes in wildfire-prone regions by offering them the ability to use computer models to predict future losses when requesting rate increases.
The proposal, unveiled on Wednesday, suggests that insurers commit to providing coverage for a certain number of homes in high-risk areas. In exchange, they will be allowed to use advanced computer models to forecast potential losses, which could help justify rate hikes. The Department of Insurance has also released a list of ZIP codes and counties where insurers can target their efforts to qualify for the agreement. These areas include El Dorado, Placer, and Nevada counties.
Insurance Commissioner Ricardo Lara emphasized the importance of holding insurance companies accountable: “Insurance companies need to commit to writing more policies, and my department will need to verify those commitments to ensure they follow through,” Lara said during a press conference.
The proposal is still in the early stages and will undergo a regulatory review process. It is not expected to be implemented until next year, at the earliest. The plan will be discussed during a virtual hearing scheduled for June 26 and is being closely watched by both insurance companies and consumer advocacy groups.
Insurance industry leaders have expressed cautious support for the plan, acknowledging its complexity. “This proposal is complex, with many trade-offs, including insurer commitments that no other state requires,” said Seren Taylor, a lobbyist and vice president of the Personal Insurance Federation of California. “However, we remain committed to working with all stakeholders to increase insurance availability and restore the health of the insurance market.”
Mark Sektnan, a lobbyist for the American Property Casualty Insurance Association, added, “The only way to increase availability and consumer access to coverage is to restore the health of the market and remove the obstacles that led to this crisis in the first place. We remain committed to working with the Department to address these concerns and implement the other desperately needed reforms to fix the insurance crisis.”
Related topics:
