The California Department of Insurance has submitted its final wildfire catastrophe modeling regulation to the Office of Administrative Law for approval.
Th regulation is intended to strengthen the state’s insurance law, Proposition 103, by establishing coverage commitments from insurance companies aimed at stabilizing the insurance market and expanding options for homeowners and business owners in high wildfire-risk areas.
The submission follows several months of public input, consultations and multiple public hearings and workshops held by the CDI.
Related: California Commissioner, Cal Poly Humboldt Working on Public Wildfire Model
Under Prop. 103, insurers are allowed to raise rates on homeowners, businesses, and consumers, but are not legally required to offer coverage in wildfire-prone areas.
The new wildfire catastrophe modeling regulation introduces a requirement for insurers to increase their policy offerings in underserved areas as a condition of incorporating catastrophe modeling into ratemaking.
The rule is intended to give insurers the ability to better assess risk allow them to more accurately price insurance and make coverage more available to homeowners and businesses who live and operate in wildfire-prone areas all the while ensuring that insurance companies commit to increase their writings of these wildfire distressed properties across the state.
Related: California Commissioner Invites Input on Final Phase of Wildfire Modeling Regulation
The American Property Casualty Insurance Association responded to the move with a statement on behalf of Mark Sektnan, APCIA vice president of state government relations, who called “forward-looking catastrophe models” an important tool to help stabilize the market.
“Importantly, this regulation represents just one piece of the comprehensive reforms needed to restore access and availability to California’s insurance market,” the statement reads. “We remain committed to working with the Department to ensure timely implementation of innovative catastrophe models and other desperately needed reforms, to ensure all consumers, drivers and small businesses have access to the coverage they need.”
Related: 2.6M Homes with a Cost of $1.3 Trillion at Moderate to Very High Risk of Wildfire
Consumer Watchdog, a group that is opposed to allowing the models, said it believes fewer not more people living in wildfire-prone areas will have insurance access under the new regulation.
The group said that Insurance Commissioner Ricardo Lara “lied when he promised insurance companies would have to cover 85% of homeowners in wildfire areas in exchange for that right to raise rates. No such requirement exists in the text of the regulation. Lara said 85% of people will be covered, but his regulation said instead companies can choose to cover only 5% more people than they cover today. … And companies don’t even have to meet that threshold, they can opt for an alternative arrangement if they want.”
Topics
California
Legislation
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