In recent years, destructive wildfires across California prompted some insurance companies to stop writing new policies for 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 remain in the state, California Insurance Commissioner Ricardo Lara announced Monday, Dec. 30.
This is the first regulation of its kind in 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,” Lara said in a statement.
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Insurers must cover at least 85% of their statewide market share in those high-risk regions, gradually increasing coverage by 5% every two years until they reach the target, according to a news release from Lara’s office.
In exchange, California will modernize reinsurance regulations to help insurance companies expand coverage and offer more policies in high-risk communities –– something the commissioner believes will boost stability and resilience in the market.
Reinsurance is insurance for insurance companies that provides support in the event of large-scale losses.
Opponents of the new regulation disagree.
Consumer Watchdog President Jamie Court spoke to KTVU News and said rates are on track to rise 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,” Court said. “There is nothing in these, like, you know, 72 pages of regulation and explanations about the cost impact on consumers.”
Consumer Watchdog says it will sue to block or overturn the new regulations, KTVU reports.
