Passage of Public Wildfire Catastrophe Model Legislation Highlight of Session Lacking Bold Action on Home Insurance Abuses

Another legislative session in Sacramento has ended with lawmakers doing little to rein in an insurance industry that has left too many Californians without the coverage they paid for or without access to affordable insurance at all. They did however pass several bills that will help homeowners recover in the wake of the LA wildfires, and others to advance community and individual wildfire mitigation that will help make California more resilient to wildfires.

Top of that list is SB 429 by Senator Dave Cortese to build the nation’s first public wildfire catastrophe model and give homeowners, renters, businesses and communities access to the information they need to understand their own risk and the ability to use it to make their communities safer.

Insurance corporations now use black box catastrophe models to penalize policyholders for their wildfire risk, but policyholders have no access to the models that decide that risk or information on how to reduce it.  Insurance companies are hiking rates, freezing new sales, and non-renewing policies based on wildfire predictions that are never publicly explained.  A public model would return some of that power to the people.

Three other bills tackle wildfire mitigation. SB 616 (Rubio, Cortese, Stern) creates a statewide home hardening and Community Wildfire Hardening Commission to set statewide best practices to protect buildings and communities from wildfire and collect data about the impacts of wildfire mitigation efforts statewide. AB 888 (Calderon) creates a grant program to help individual homeowners and local governments pay for building upgrades and vegetation clearance and maintenance to make their properties safe. And Assemblymember Connolly’s AB 1 would require the insurance commissioner to consider new wildfire mitigation actions to update Safer From Wildfires mitigation discount regulations.

But while all three bills aim at reducing risk in California, none of them makes the insurance industry take its share of the responsibility. SB 616 and AB 1 fail to make insurance companies sell coverage to people who protect their homes from fire. And AB 888 fails to make the insurance industry chip in for wildfire mitigation that will ultimately save them money by reducing what they pay out in wildfire claims.

Senator Ben Allan’s SB 495 also passed, requiring insurance companies to pay 60% of homeowners’ personal property coverage after a declared disaster without forcing consumers to fill out an onerous and re-traumatizing itemized list of their lost possessions. Before the insurance lobby got to it, the bill required a 100% payout.

The FAIR Plan will also see some small changes if the Governor signs AB 226 (Alvarez, Calderon) which gives the FAIR Plan access to more financing options to pay claims, and AB 290 (Bauer-Kahan), which finally requires the FAIR Plan to create an automatic payment system for policyholders.

On the post-wildfire recovery front, Senator Sasha Perez’s SB 547 extends the post-disaster insurance non-renewal and cancellation moratorium – that currently applies only to residential policies – to businesses, affordable housing providers, condo associations and other commercial policyholders in a ZIP Code within or next to the fire perimeter. 

AB 238 (Harabedian, Irwin) requires mortgage servicers to grant up to one full year forbearance on mortgage payments for homeowners experiencing hardship due to the LA Fires. And already signed by the Governor is  Assemblymember Harabedian’s AB 493 to require mortgage companies to pay interest on insurance payments they hold for consumers – and do not release until rebuilding begins in the wake of a loss. As urgency measures, both bills will take effect immediately to help those currently recovering.