California Department of Insurance (CDI) Service Details | www.ca.govCalifornia Insurance Commissioner Ricardo Lara will enforce the new insurance pricing regulation he wrote recognizing and rewarding wildfire safety and mitigation efforts made by homeowners and businesses, according to a press release.

Lara’s regulation is the first in the nation requiring insurance companies to provide discounts to consumers under the “Safer from Wildfires” framework created by the California Department of Insurance in partnership with state emergency preparedness agencies. The regulation is now state law and enshrined in the California Code of Regulations.

“Protecting Californians from deadly wildfires means everyone doing their part, including insurance companies by rewarding consumers for being safer from wildfires,” said Lara. “The reality of climate change is driving my determination to help communities better prepare, help our firefighters save lives and help more Californians find the insurance they can afford. My department will work diligently to increase discounts to reward the hard work that California consumers do to protect their families, homes, businesses, and communities.”

Lara’s regulation requires insurance companies to submit new rate filings incorporating wildfire safety standards created by the department and to establish a process for releasing wildfire risk determinations to residents and businesses within 180 days. Transparency is an important benefit of this regulation, by requiring insurance companies to provide consumers with their property’s “wildfire risk score” and creating a right to appeal that score.

This regulation is part of a comprehensive solution that Lara initiated after taking office to protect consumers from climate change-intensified wildfires. When Lara took office in 2019, insurance companies representing 7% of the residential market provided insurance discounts and, under his leadership, that figure has grown to 40%. When this regulation is fully implemented, it will make 100% of the residential and commercial market aligned with the Safer from Wildfires framework.

Lara directed the department to write the regulation to protect consumers and improve market competition after hearing first-hand from consumers and business owners about their frustration with insurance companies that did not consider mitigation in their rating plans. During town hall meetings in more than 38 counties and an extensive department investigatory wildfire hearing in 2020, many consumers testified that their homes and businesses were subject to “wildfire risk scores” that many did not know existed and had no right to appeal if inaccurate.

Regulation followed extensive public input and Safer from Wildfires partnership with Governor Gavin Newsom’s Administration

Lara took what he learned from Californians to shape this rule that will promote a fair, transparent and competitive insurance market. In October 2021, Lara shared an initial version of the text of the regulation. Following further public input, Lara formally proposed his regulations in February 2022 and held a public hearing to receive verbal and written comments before submitting the final regulation on September 1 for approval by the California Office of Administrative Law, of which that approval has now been received.

Ricardo Lara

Ricardo Lara

The regulation incorporates the Safer from Wildfires framework, created in February 2022 by a first-ever partnership between the Department of Insurance and the emergency preparedness agencies in Governor Newsom’s Administration, including the California Department of Forestry and Fire Protection (CAL FIRE), the Governor’s Office of Emergency Services (CalOES), the Governor’s Office of Planning and Research and the California Public Utilities Commission.

“Home Hardening retrofits, along with Defensible Space significantly increase a home’s chance of surviving a wildfire,” said Chief Daniel Berlant, CAL FIRE deputy director of community wildfire preparedness & mitigation. “Using the latest fire science and recent wildfire data, these retrofits and landscaping requirements provide a strong path to structure survivability. CAL FIRE is currently funding over three hundred million dollars in local wildfire prevention projects to prepare communities against wildfire, but we know it will take every resident doing their part to ensure California is fully protected.”

Regulations will drive down costs and create transparency for consumers

The regulation requires insurance companies to submit new rates that recognize the benefit of safety measures such as upgraded roofs and windows, defensible space and 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, which currently includes the counties of Los Angeles, Santa Barbara and Butte, as well as cities and local districts.

“My regulation is the result of listening closely to the needs of consumers and businesses and crafting common-sense, lasting solutions that strengthen our ability to protect Californians from the threat of climate change-intensified wildfires,” said Lara.

The Safer from Wildfires regulation is part of a larger solution that Lara is pursuing for consumers and wildfire survivors that includes working to increase insurance protections and market competition to help protect consumers. Commissioner Lara’s actions since taking office in 2019 include, among others:

  • Protecting more than four million homeowners from non-renewal or cancellation of insurance following declared wildfire emergencies, in order to speed up community recovery.
  • Sponsoring new insurance protections signed into law by Governor Newsom — despite opposition from insurance companies — that will mean larger payouts for some consumer claims, less red tape from insurance companies, and more help for people under evacuation orders.
  • Ordering the FAIR Plan, the state’s insurer of last resort, to offer a more comprehensive homeowners policy as an option, which a judge upheld, as well as expanding residential and commercial coverage limits for the first time in 25 years to keep pace with increased costs.

Support for wildfire safety regulation: What Californians are saying

Those supporting the regulation’s adoption include many on the front lines of wildfire safety such as fire leaders, local communities, homeowners groups and agricultural businesses:

“The need to get outdoors is greater than ever, and we have more Californians who want to go camping than we have camping accommodations. Yet one of the greatest barriers for campgrounds and RV parks is the ability to obtain insurance with appropriate coverage at reasonable rates. Providing rebates or rate decreases for fire abatement strategies will allow these small businesses to stay protected and in turn allow them to serve more California consumers,” noted Dyana Kelley, CEO and president of the California Outdoor Hospitality Association.