If insurance companies want to use predictive formulas to justify wildfire insurance rate increases in California, they’ll have to write more policies in high-risk areas, under sweeping reform measures currently underway in the state.
Commissioner Ricardo Lara aims to address the limitations of California’s Proposition 103, which permits insurers to propose any rate increases needed to cover future losses but doesn’t require them to cover all residents. The regulation has led to insurers increasing rates in some areas while pulling back from areas with high wildfire risk, forcing residents to turn to California’s last-resort FAIR Plan for coverage, according to an insurance department press release.
Lara’s reform would require companies to write policies in wildfire-affected areas if they want to use predictive wildfire catastrophe modeling to assess risk.
Reducing reliance on last-resort insurance
In June, the California Department of Insurance shared a map showing the large areas of the Golden State that have a higher …