California to require insurers to offer policies in fire-prone areas

IN RECENT YEARS, DESTRUCTIVE WILDFIRES IN CALIFORNIA PROMPTED SOME INSURANCE COMPANIES TO STOP WRITING NEW POLICIES IN HIGH-RISK AREAS.

NOW, CALIFORNIA IS IMPLEMENTING A NEW REGULATION REQUIRING HOME INSURERS TO OFFER NEW POLICIES IN FIRE-PRONE AREAS IF THEY WANT TO STAY IN THE STATE, RICARDO LARA, CALIFORNIA’S INSURANCE COMMISSIONER, ANNOUNCED MONDAY.

THIS IS A FIRST OF ITS KIND REQUIREMENT FOR THE STATE OF CALIFORNIA.

“CALIFORNIANS DESERVE A RELIABLE INSURANCE MARKET THAT DOESN’T RETREAT FROM COMMUNITIES MOST VULNERABLE TO WILDFIRES AND CLIMATE CHANGE. THIS IS A HISTORIC MOMENT FOR CALIFORNIA,” THE COMMISSIONER SAID IN A STATEMENT.

INSURERS MUST COVER AT LEAST 85% OF THEIR STATEWIDE MARKET SHARE IN THOSE HIGH-RISK REGIONS AND GRADUALLY INCREASE COVERAGE BY 5% EVERY TWO YEARS UNTIL THEY REACH THAT TARGET, ACCORDING TO A NEWS RELEASE FROM LARA’S OFFICE.

IN EXCHANGE, CALIFORNIA WILL MODERNIZE REINSURANCE REGULATIONS to HELP INSURANCE COMPANIES EXPAND COVERAGE OFFERING MORE POLICIES IN HIGH-RISK COMMUNITIES – WHICH THE COMMISSIONER BELIEVES WILL BOOST STABILITY AND RESILIENCE IN THE MARKET.

REINSURANCE IS INSURANCE FOR INSURANCE COMPANIES AND WOULD HELP INSURERS IN THE EVENT OF A LARGE-SCALE LOSS.

OPPONENTS OF THE NEW REGULATION DISAGREE.

CONSUMER WATCHDOG PRESIDENT JAMIE COURT SPOKE TO KTVU NEWS AND SAID RATES ARE GOING TO GO UP BY 40%.

“THERE IS NO LEGALLY BINDING COMMITMENT IN THIS DOCUMENT THAT THEY HAVE TO COVER MORE PEOPLE, BUT WE’RE ALL GOING TO BE PAYING MORE. THERE IS NOTHING IN THESE LIKE, YOU KNOW, 72 PAGES OF REGULATION AND EXPLANATIONS ABOUT THE COST IMPACT ON CONSUMERS,” COURT SAID.

CONSUMER WATCHDOG SAYS IT WILL SUE TO BLOCK OR OVERTURN THE NEW REGULATIONS, KTVU REPORTS.