CA Insurance Commissioner Seeks Public Input On Wildfire Coverage
Speaker 1: 00:00 More than 6,000 buildings have been destroyed in the wildfires around California. So far this summer, some homeowners have discovered that it's no longer possible to get insurance for their homes at a rate they can afford. California's insurance commissioner. Ricardo Lara is calling for public input at a hearing next month. That will look at how to stabilize the insurance industry while protecting lives and property insurance commissioner. Laura, thank you so much for joining us. Thank you. It's great to be here. So now why are you holding this hearing and what kind of input are you really looking for? Speaker 2: 00:33 Right. So, you know, we've seen these unprecedented fires really have put California on a collision course with extreme wildfires, with tremendous impact, not only to homeowners businesses, but to our public health. And so this hearing essentially is gonna, uh, seek to pro get information from the public and from our first responders and from firefighters and fire experts about how do we develop standardized home hardening standards? How do we give more transparency for consumers about their welfare risk scores? And also how do we create incentives so that consumers recognize, uh, what home hardening is and what discounts, if any, we can give so that we continue to incentivize homeowners should do the right thing Speaker 1: 01:19 That raises the question of, do you see your role as protecting the insurance industry or the consumer? Where's your primary allegiance? Speaker 2: 01:27 Yeah. You know, we don't have to choose, we can do both. We as the insurance commissioner, uh, overseeing the largest insurance market. Uh, my responsibility is to both to ensure that we provide affordable and available insurance for our consumers and provide adequate consumer protections and that we protect this market so that people can get their claims paid accordingly. So I, I do essentially both worlds. Uh, and so this hearing is going to allow us to really get the information that we need on how do we continue to incentivize consumers to do the right thing, get them the resources they need so that they can continue harming their homes and also create community wide mitigation standards, not just at the individual parcel, but community-wide now because, you know, we hear time and time again when I've gone to different communities, you know, I've done everything to protect my property, but my neighbor has it, Speaker 1: 02:21 Do you have an estimate or, or how do you quantify how many California homeowners are now facing the future with no homeowner insurance? Because they either cannot afford it anymore or were denied Speaker 2: 02:33 Over 200% increase in non renewables throughout the state of California are directly linked to these fires. And so what we want is one, we want to create these mitigation standards so that in turn, once the homeowner and the consumer does the hard work of Harding, their home, that they get a guarantee that they're going to be able to find coverage in the community. Currently insurance companies are asking homeowners to invest thousands of dollars. And yet there's no guarantee that they're going to find coverage, you know, send you a County is one of the eight counties that saw a greater than 10% increase in non renewables from 2017 to 2018. Those are our latest numbers and statewide average around, uh, is a 3% increase in our renewals. So San Diego has been definitely impacted by now non-renewal as of insurance companies. Speaker 1: 03:27 Okay. So now AB 2367, which did not pass this year, which you had supported would have required insurers to continue insuring anyone who took certain actions to far harden their homes. So explain what fire hardening your home means. Speaker 2: 03:42 You know, home Harding examples are replacing your wood shake roof, which we know reduce your likelihood of having a major loss, less expensive fixes such as replacing your exterior vans with Ember resistant mesh events are things that are important, of course, addressing vegetation within five feet of your home to reduce any contact points. But now the other thing we're working on is how do we, um, how do we scale this to the community level so that communities understand what they need to do given their topography and their own climate and environment. And right now there's currently no statewide standards that look at what a community needs to do. Speaker 1: 04:22 So even though this measure that would have perhaps provided some funding to do that, that failed this year, do you hold out any hope that it will come back in the future and what would need to change for it to pass? Do you think Speaker 2: 04:33 We expect to reintroduce us to such a station that really again, get something for the consumer? Right? Speaker 1: 04:40 Well, of course the fire risk could actually affect where developers are allowed to develop in that rural, urban interface. So this particular legislation is, is particularly important, right? Speaker 2: 04:52 Exactly. We need to have an honest conversation about land use and how we rebuild and where are we built, uh, and you know, to not do so. I think we do it at our own peril. Speaker 1: 05:05 Have some insurance companies already pulled out of California, do you think, or is there a risk that they might a large number of the might in the near future as a result of these wildfires? Speaker 2: 05:15 No, there hasn't been an insurance company that's pulled out of California. We in California have the largest insurance market in the country, fourth or fifth in the world. So insurance companies, you know, are still very profitable in other insurance lines. So it's not that, you know, although they often threatened to leave California when they say that, um, they don't, they're talking about the homeowner's market, not necessarily all the other lines. So, you know, the, the object here is to continue to monitor the homeowners insurance market, uh, and guarantee that the consumers are going to get something, as we know, rates are going to continue to go up in certain parts of the state where wildfires continue to be prone. And what we're saying is they should get mitigation discounts. They should get a guarantee of coverage and they should create and work with the insurance industry to let them know in a way that's transparent, how they can lessen this fire risk score, as opposed to just being assigned these scores without an opportunity to mitigate and to understand why they're getting these scores. Speaker 1: 06:25 Are there any other legislative actions that you're thinking of taking that could help to, to balance the situation? Speaker 2: 06:31 Well, I think we're looking in terms of our regulatory authority of figuring out how do we, um, incentivizing insurance companies, to be honest about what their actual rate is going to be, uh, as opposed to just continuing to undercut these increases, um, and trying to avoid public scrutiny, which then just exacerbates the problem. Speaker 1: 06:57 So how can people submit testimony to your October hearing? Speaker 2: 07:01 So we're encouraging, um, our community and, and our consumers to, uh, please log onto our website, have insurance.ca.gov. Um, we are, we're taking all the testimony and look forward to having a fruitful, um, hearing that's going to lead to some, um, substantial changes for the state of California, as we try to reckon with climate change and these growing wildfires. Speaker 1: 07:29 We've been speaking with California's insurance commissioner, Ricardo, Lara commissioner, Laura. Thank you so much for joining us. Speaker 2: 07:36 Thank you so much.