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Rules To Mandate Insurance Discounts Are Necessary to Give New CA “Safer From Wildfire” Prevention Guidelines Teeth

Fri, 02/18/2022 - 10:05
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Consumer Watchdog Calls On Commissioner Lara to Jumpstart Mitigation Discount Rulemaking

Wildfires

Los Angeles, CA – A new state wildfire protection framework released this week is an empty promise for homeowners if the Insurance Commissioner does not also require that insurance companies give discounts to policyholders who follow its recommendations, said Consumer Watchdog today. 

Draft regulations have been under consideration at the Department of Insurance to mandate wildfire mitigation discounts for the past year, yet Insurance Commissioner Ricardo Lara did not mention the rules or their status when announcing the “Safer From Wildfires” framework this week.

“The new framework will only make Californians ‘safer from wildfires’ if homeowners know that their investment in wildfire mitigation today will be repaid with more affordable home insurance tomorrow. Will Commissioner Lara require insurers to reward homeowners and communities that do everything the state recommends to protect their homes from wildfires? Or does he intend to rely on the insurance industry’s good will and hope insurers voluntarily make rates more fair?” asked Carmen Balber, executive director of Consumer Watchdog. “Unless a rule mandating discounts is enacted, the state’s new wildfire framework is an empty promise.” 

After investigatory hearings in October 2020, Commissioner Lara proposed a rule to require mitigation discounts in February 2021, and released amendments to that proposed rule in October 2021. Since then, the rule has languished. 

The “Safer From Wildfires” framework identifying best practices to protect homes and communities from wildfire damage, was released this week by California Insurance Commissioner Ricardo Lara and Newsom Administration fire and emergency services agencies. 

The draft regulation identifies categories of wildfire mitigation that merit mandatory insurance discounts, categories like those in the “Safer From Wildfires” framework that include steps to protect a structure, clear defensible space, and community-level mitigation. 

The draft regulation can be found here: http://www.insurance.ca.gov/0250-insurers/0500-legal-info/0300-workshop-insurers/upload/Mitigation-in-Rating-Plans-and-Wildfire-Risk-Models-Revised-Workshop-Draft-Text-of-Regulation.pdf

The "Safer From Wildfires" framework can be found here: http://www.insurance.ca.gov/01-consumers/200-wrr/upload/Safer-from-Wildfires-one-pager.pdf

Read consumer groups’ letter to Insurance Commissioner Lara about the pending wildfire mitigation regulation: https://consumerwatchdog.org/sites/default/files/2021-11/2021-11-10%20CWD%20CFA%20CFC%20Comments%20REG-2020-00015.pdf

The groups argue the regulation mandating mitigation discounts should also apply to insurance companies' decisions about which properties they will insure. California homeowners, businesses and communities face unfair price increases and non-renewals, and new wildfire mitigation rules must protect against both, wrote the groups. The letter also notes that insurers must fully disclose to consumers how they decide a homeowner’s fire risk, and that decision’s impact on premiums.

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