By Camille Von Kaenel, POLITICO
With help from Blanca Begert, Alex Nieves and Hannah Northey
BURNING PLAN: Climate-change-fueled wildfires have scared insurance companies out of California. Now, Insurance Commissioner Ricardo Lara is trying to let climate change show up in rates in an attempt to entice them back.
He proposed today letting property insurers use “catastrophic modeling” that takes forward-looking risk from climate change into account when calculating their rates, rather than basing them on past trends.
It’s exactly what insurers have said they want and need to stay in the Golden State, and it’s the cornerstone of Lara’s plan to get them to stay. He’d pitched it in September as the thing that would get insurers to agree to keep writing policies in disaster-prone areas.
They offered measured praise today but stopped short of saying they’d start growing in the state again.
“It’s a positive step forward and an important component of the commissioner’s larger sustainable insurance strategy to restore a healthy and competitive market,” said Rex Frazier, president of the Personal Insurance Federation of California, which represents all the major insurers. “All the pieces, including reinsurance and timely approvals, are important to make it successful.”
“Catastrophe” sounds expensive — and it probably is. Consumer advocates have long been wary of the change, which is part of what torpedoed legislative negotiations last fall and kept the ball in Lara’s court.
“Bottom line, it’s not good,” Jamie Court, the president of Consumer Watchdog, said of Lara’s proposal. Of particular concern to him is a provision that would protect insurers’ data by requiring the regulators in charge of approving catastrophe models to keep the information confidential.
Lara is in his final term and eyeing the Los Angeles County Board of Supervisors next, where wildfire insurance isn’t much of an electoral issue. But his former colleagues in the Legislature are increasingly feeling the heat of a possible consumer revolt and are watching closely and ready to jump in.
The majority of the Assembly Insurance Committee said at an oversight hearing Wednesday that they’re getting calls from constituents complaining about unavailability, some daily, and one — Assemblymember Joe Patterson, a Republican in the Sierra foothills — lost his own coverage when American National pulled out last month.
“I’m not personally thinking about, ‘Hey, let’s come up with something that we’re going to do in 2026,” he said. “I mean, people can’t afford to live.”
Sen. Josh Becker introduced a bill this week to take Lara’s reform a step further. SB 1060 would require insurers account for the wildfire risk reduction benefits of vegetation clearing and home hardening in their underwriting models, which aren’t currently regulated by the Insurance Department and guide many of insurers’ longer-term decisions about what risk they are willing to take on.
“While the Insurance Commissioner’s actions are aimed at stabilizing rates for the market in California, that is only one part of the problem,” he said in an email today.