WPBN: In an effort to expand insurance coverage to more wildfire-prone areas of the state, California Insurance Commissioner Ricardo Lara has announced new rules.
Instead of merely depending on past losses, insurance companies will be permitted to employ computer modeling, with input from a variety of geographical and meteorological data, when creating their policies under the new legislation.
They will be expected to provide coverage to the majority of households located in zip codes that are at danger of fire in return.
Every year, dozens of wildfires rage across California, causing significant property damage and occasionally fatalities.
The California Department of Forestry and Fire Protection reports that 307,501 acres were destroyed by 7,477 wildfires in 2022.
As a result, some Californians have had trouble finding home insurance beyond what the FAIR Plan, the state’s insurer of last resort, offers, especially those who reside in remote or mountainous areas.
Lara announced on Friday that the Office of Administrative Law has accepted his proposal, which will go into effect on January 2, 2025.
The commissioner issued a statement in which he said, “With our changing climate, we can no longer look to the past.” In order to safeguard the availability of insurance for Californians, we are utilizing creative and forward-thinking strategies.
Michael Soller, the deputy insurance commissioner for the state of California, made the following statement to CBS News: “This is the first time in California that there is a requirement for insurance companies to write policies, and we are going to be enforcing that.”
According to Soller, the proposed regulations would mandate that insurance firms make an effort to provide coverage for 85 percent of the properties located in zip codes that are considered to be at danger of fire.
The American Property Casualty Insurance Association, which is an organization that represents insurance companies, issued a statement that said as follows: “California will continue to have a robust regulatory and rate approval process that guarantees that rates reflect the actual cost of covering claims.”
With great anticipation, we are looking forward to collaborating with [the department] to put these new laws into effect and ensure that they are both effective and feasible.
Carmen Balber, the executive director of Consumer Watchdog, expressed her disapproval of the new laws by making the following statement: “Full transparency is what keeps insurance rates honest, but Commissioner Lara’s rule does away with that protection.”
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With this law, insurance firms will be able to boost premiums based on hidden algorithms, but they will not be able to expand coverage as they had promised.
According to a study that was published in August, thousands of people who were covered by Liberty Mutual Fire Insurance Company would lose their fire coverage as a result of the insurer’s policy of not renewing coverage for those who reside in locations that are hazardous to fire.
According to a research that was released in October by the California Association of Realtors, which was based on a survey of 96,000 realtors in the state, over the course of the previous year, 13.4 percent of sales that were unsuccessful in the Golden State were due to the fact that it was difficult to obtain insurance that was within their price threshold.
