Mariposa County French Fire on July 4, 2024 - Photo taken looking towards the Mariposa Masonic Lodge. Credit: Sierra Sun Times
Related: California Insurance Commissioner Lara Invites Public Input on Final Phase of “First of Its Kind” New Wildfire Modeling Regulation
August 18, 2024 - The Rural County Representatives of California (RCRC) reports California Insurance Commissioner Ricardo Lara is inviting public input as he begins the final phase of approving a “first of its kind” catastrophe modeling and ratemaking regulation aimed to help restore insurance options for Californians and prepare for climate change. On August 16th, the Office of Administrative Law published the regulation online, marking the beginning of a public comment period that will conclude with a hearing convened by Commissioner Lara on September 17.
This announcement marks the latest step to enacting Commissioner Lara’s Sustainable Insurance Strategy which seeks to safeguard the integrity of the state’s insurance market -- keeping California on track for a December 2024 goal of enacting the state’s largest insurance reform in over 30 years.
The regulation posted today details the commitments that insurance companies must make in future rate filings to write more policies in wildfire distressed areas as a condition for using wildfire catastrophe modeling to more accurately assess wildfire risks they will write. The regulation also provides for the public review of models used in ratemaking, as required under California law. This marks two “firsts” for the state’s regulation of insurance rates: The first time insurance companies will commit to cover higher risk homes in wildfire distressed areas, and the first use of forward-looking wildfire catastrophe modeling.
The strategy is intended to address limitations of Proposition 103, passed by voters in 1988. Under that law, insurance companies are free to propose rates at any level needed to cover future losses but, unlike public utilities, are not required to cover all residents. With the combination of increasing climate risks, rising costs of repair and rebuilding, and global economic forces, major companies have increased rates while pulling back from higher-risk properties, resulting in areas where the FAIR Plan is now the only option for consumers. In June, the Department released a first-ever map showing where FAIR Plan policies have grown and the traditional insurance market has retreated. The proposed regulations released today focus on reversing FAIR Plan growth as a result of insurance companies committing to write more in high risk areas through the use of wildfire catastrophe models in ratemaking.
The Department of Insurance will hold a virtual public hearing (details here) to take input on the proposed regulation on September 17, 2024, at 10AM/PT. Written comments can be submitted to CDIRegulations@insurance.ca.gov.
ABOUT RURAL COUNTY REPRESENTATIVES OF CALIFORNIA (RCRC)
The Rural County Representatives of California (RCRC) is a thirty-seven member county strong service organization that champions policies on behalf of California’s rural counties. RCRC is dedicated to representing the collective unique interests of its membership, providing legislative and regulatory representation at the State and Federal levels, and providing responsible services for its members to enhance and protect the quality of life in rural California counties. To learn more about RCRC, visit rcrcnet.org and follow @RuralCounties on Twitter, Facebook and Instagram.
Source: RCRC
