TerriLynn Bejcek, left, and Lassen County District 5 Supervisor Jason Ingram pose beside a recently erected billboard on Highway 395 near Janesville. Ingram said he will not be satisfied until homeowners actually get lower rates.

Insurance Commissioner announced strategy to improve insurance conditions

According to a Sept. 21 statement from the California Department of Insurance, Insurance Commissioner Ricardo Lara announced a package of executive actions aimed at improving insurance choices and protecting Californians from increasing climate threats while addressing the long-term sustainability of the nation’s largest insurance market.

California Insurance Commissioner Ricardo Lara.

The department also included this statement by California Farm Bureau President Jamie Johanson as part of its Sept. 21 statement.

“California’s rural communities have been impacted by wildfires damaging farm structures and crops and by farmers and ranchers being denied insurance coverage to protect their properties. Farm Bureau supports the effort to restore competition to California’s insurance market to get insurers doing business in those areas, again. The California Farm Bureau welcomes Commissioner Lara’s announcement about actions the Department of Insurance will take to bring insurers back to California. We support a competitive market that provides consumers and farmers access to comprehensive risk protection.”

Key regulatory elements of the plan include:

  • Executive action by Lara to transition homeowners and businesses from the FAIR Plan back into the normal insurance market with commitments from insurance companies to cover all parts of California by writing no less than 85 percent of their statewide market share in high wildfire risk communities. For example, if a company writes 20 out of 100 homes statewide, it must write 17 out of 100 homes in a distressed area;
  • Giving FAIR Plan policyholders who comply with the new Safer from Wildfires regulation first priority for transition to the normal market, thus enhancing the state’s overall wildfire safety efforts;
  • Expediting the Department’s introduction of new rules for the review of climate catastrophe models that recognize the benefits of wildfire safety and mitigation actions at the state, local, and parcel levels;
  • Directing the FAIR Plan to further expand commercial coverage to $20 million per building to close insurance gaps for homeowners associations and condominium developments to help meet the state’s housing goals and to provide required coverage to other large businesses in the state;
  • Holding public meetings exploring incorporating California-only reinsurance costs into rate filings;
  • Improving rate filing procedures and timelines by enforcing the requirement for insurance companies to submit a complete rate filing, hiring additional Department staff to review rate applications and inform regulatory changes, and enacting intervenor reform to increase transparency and public participation in the process;
  • Increasing data reporting by the FAIR Plan to the department, legislature, and governor to monitor progress toward reducing its policyholders; and,
  • Ordering changes to the FAIR Plan to prevent it from going bankrupt in the case of an extraordinary catastrophic event, including building its reserves and financial safeguards.

California’s Sustainable Insurance Strategy builds on actions that Commissioner Lara has taken including enacting regulations under his authority and sponsoring legislation to improve insurance benefits.

Lara has mandated insurance companies to recognize and reward wildfire safety and mitigation efforts made by homeowners and businesses. His new regulation requires insurance companies to submit new rates that recognize the benefit of safety measures such as upgraded roofs and windows, defensible space, and memberships in community-wide programs such as Firewise USA and the Fire Risk Reduction Community designation developed by the state’s Board of Forestry and Fire Protection. It further requires insurance companies to provide discounts to consumers that meet various elements of the Safer from Wildfires framework and to provide consumers with their property’s “wildfire risk score,” including a right for consumers to appeal that score.

Lara continues to reform the FAIR Plan by expanding its coverage options and ensuring wider availability for its policyholders, including expanding residential and commercial coverage limits for the first time in 25 years to keep pace with increased costs. His agreement with the FAIR Plan increased its commercial coverage limit to $20 million per location for businesses unable to find coverage in the normal insurance marketplace.

Under a law written by then-Senator Lara, the Commissioner has protected more than 4 million peoplestatewide since 2019 through mandatory one-year moratoriums on insurance companies cancelling or non-renewing residential insurance policies in certain areas within or adjacent to a fire perimeter after a declared state of emergency is issued by the governor.

Lara-sponsored bills signed into law by the Governor — despite opposition from insurance companies — will mean quicker payouts for some consumer claims, less red tape from insurance companies, and more help for people under evacuation orders.