California lawmakers propose 10-bill package to tackle wildfire insurance crisis

SACRAMENTO, Calif. — The California Department of Insurance is backing a comprehensive package of ten bills aimed at addressing the rising insurance costs and the devastating impact of wildfires across the state. Commissioner Ricardo Lara announced the initiative, emphasizing the urgent need for "transformational action" to protect consumers and restore the state's insurance market.

"Now is the time for transformational action," Lara said in a statement. "I will not shy away from this moment and will continue to advocate for consumer protection and the restoration of our state’s insurance market. Bold actions will yield bold results."

The legislative package includes measures such as the California Safe Homes Act and the California Community Fire Hardening Commission Act, which aim to establish new bodies within the Department of Insurance for future efforts. Other bills, like the Eliminate the List Act, would require insurance agencies to pay out the full amount without demanding detailed inventories, while the Insurance Payment Protection Act seeks to cap fees from adjuster-contracted work at 15% of the total payout.

"These bills come directly from what we're hearing from both northern California and then also the wildfire survivors from the devastating fires in Southern California. Deputy Insurance Commissioner Michael Soller explained. "So there's a mix of bills and the goal is to get us to a place where we have strong climate resilience for our entire state."

Additional proposals address long-term issues, including the Deceptive Disaster Relief Advertising Act, which mandates businesses advertising disaster relief services to include a disclaimer stating, "This is a solicitation for business. Not affiliated with any government entity or nonprofit." Soller explained they heard about and then saw in Los Angeles the overwhelming amount of advertisements and solicitations wildfire survivors can receive from businesses offering disaster relief services.

One of note is the California Wildfire Public Model Act which proposes the creation of the first publicly available catastrophe model for wildfires in the U.S., intended to aid future disaster relief efforts.

The coalition of legislators supporting the bills is primarily composed of Democrats, with Republican Assemblymember Heath Flora joining the effort. Separately, Republican Assemblymember Carl DeMaio introduced the CA Insurance Reform and Rate Stabilization Initiative, which would cap insurance rate increases at 7% per year, with the state covering any costs above that.

Soller noted that all 10 bills were sponsored by Commissioner Lara, as part of a broader strategy to address both long-term and emerging issues faced by residents at risk of wildfires or those who have already suffered losses.

"How do we not only protect people, how do we protect communities, and how do we prevent the kinds of community loss that we’ve seen in Southern California, that we’ve seen in Paradise, that we’ve seen in Redding," Soller said. "All across the state, those massive ember-driven fires. There’s a lot more that we need to be doing and we need to be planning for it right now."

Addressing concerns that some bills might discourage the struggling insurance industry, Soller argued that the legislation ensures insurance companies fulfill their obligations after residents have paid into their plans for years. He explained that the coalition of lawmakers united because they recognized the challenges their constituents were facing.

Several of the bills have yet to be introduced, but lawmakers have until February 21 to present them, a deadline they promise to meet. A full list of bills:

1. The California Safe Homes Act (authored by Assembly Member Lisa Calderon) -- Creates a grant program through CDI that provides state tax-free funding from existing sources to homeowners for fire-rated roofs and creation of non-ignition zones around home
2. The Business Insurance Protection Act (jointly authored by Senators Sasha Renée Pérez and Susan Rubio) -- Working off Wildfire Safety and Recovery Act of 2018, written by Commissioner Lara when he was Senator, extends moratorium on insurance issuing non-renewals and expands it to include businesses HOAs, non-profits, and affordable housing
3. The Insurance Payment Protection Act (AB 597, authored by Assembly Member John Harabedian) -- Establishes a 15% cap on fees for adjuster contracted work, and prohibits any additional awards outside the contract. There was concern homeowners were being fleeced by bad actors
4. Eliminate “The List” Act (authored by Senator Ben Allen) -- Forces insurance agencies to pay out 100 percent of contents coverage without needing detailed inventory list, also extends time residents can have before having to provide proof to at least 180 days. It also looks to establish data collection for CDI to understand insurance availability going forward.
5. The California Community Fire Hardening Commission Act (jointly authored by Senators Susan Rubio, Dave Cortese, and Henry Stern) -- Establish commission under CDI that would focus on providing recommendations to assist homeowners in finding ways to get discounts on insurance for home hardening
6. The Deceptive Disaster Relief Advertising Act (AB 637, authored by Assembly Member Heath Flora) -- Requires services advertising themselves as disaster relief clearly state they “This is a solicitation for business. Not affiliated with any government entity or non-profit.
7. The California Wildfire Public Model Act (authored by Senator Dave Cortese) -- Establishes first ever catastrophe model for wildfires available to the public. This type of modeling has previously been done for terrorism, earthquakes, hurricanes to prepare disaster efforts ahead of time.
8. The Insurance and Wildfire Safety Act (AB 1, authored by Assembly Member Damon Connolly) -- Builds off Safer from Wildfires regulation which required insurance companies provide more transparency on wildfire risks on properties, and ways to improve it to get discounts. Requires the CDI commissioner regularly update based on new fire science and public input.
9. The FAIR Plan Stability Act (AB 226, jointly authored by Assembly Members Lisa Calderon and David Alvarez) -- Gives access to the FAIR Plan, insurance of last resort for high risk properties, to bonds through the California Infrastructure and Economic Development Bank, in case worst case scenario.
10. The Savings Accounts for Mitigation and Catastrophes Act (AB 232, jointly authored by Assembly Members Lisa Calderon and Mike Gipson) -- Creates a classification for a tax exempt bank account people can create specifically for home hardening and insurance deductibles in disasters.