California

California Politicians Double Down on Encouraging People To Live in Wildfire-Prone Areas

The Renew California legislation introduced yesterday would force insurance companies to renew insurance policies in wildfire zones.

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California's wildfires are getting deadlier and more destructive each year. Naturally then, state politicians want to make it easier to get insurance in fire-prone areas.

On Tuesday, Assemblymembers Lorena Gonzalez (D–San Diego) and Monique Limon (D–Santa Barbara) introduced Assembly Bill (A.B.) 2367. Their "Renew California" bill would require that insurance companies write new policies or indefinitely renew current ones for existing homes provided they meet yet-to-be-determined state standards for fire-hardening.

Roughly one million homes in wildfire-affected areas are already covered by a one-year moratorium on non-renewals issued by the state's elected insurance commissioner, Ricardo Lara, in December 2019. Lara has endorsed A.B. 2367.

Both the current moratorium and Tuesday's bill are meant to combat the rising trend of insurance companies refusing to renew policies in wildfire-prone areas. Data from the state's Department of Insurance shows that non-renewals have risen by 10 percent in counties affected by 2015 and 2017 wildfires.

"Homeowners who have done all the right things, hardening their homes and mitigating for fire danger, are still seeing their insurance canceled or non-renewed," said Gonzalez in a press release. "We can't allow insurance companies to continue to drop responsible homeowners from San Diego to the Sierras just because they can."

It's possible insurance companies are dropping profitable policies "just because they can." They could also be responding to state regulations that prevent them from raising rates to cover the increased costs of providing insurance in wildfire-prone areas.

In California, proposed rate increases have to be approved by the insurance commissioner. State law also prevents insurance companies from passing on to customers the costs of reinsurance (insurance on insurance), climate change, and other future risks. Third parties can also contest proposed rate increases, which consumer advocates frequently do.

Limited in their ability to raise rates, insurance companies have responded by issuing fewer new policies, and renewing fewer old ones in the riskiest areas of the state. That's created the availability problems so many homeowners are facing now, says R.J. Lehman of the R Street Institute.

A.B. 2367, he cautions, could actually make things worse by encouraging some carriers to stop offering property insurance in California altogether.

"Homeowners insurance is risky. The returns are variable, and there's companies that can just decide we don't want to sell that product in that state anymore," Lehman says, adding that they could content themselves with selling more profitable auto insurance instead.

That's what happened in Florida during the 2000s, where a combination of state limits on rate increases and a string of major hurricanes prompted insurers like Allstate and State Farm to stop offering property insurance in the Sunshine State.

Proponents of the Renew California legislation argue that the bill merely requires insurance companies to not stiff responsible homeowners and communities who adopt the fire-hardening standards the bill would create.

That includes Lara, who said in a press release, that "if you have a fire-hardened home in a fire-hardened community, you should be able to get insurance and keep it."

If these to-be-determined fire-hardening standards did actually reduce wildfire risks, counters Lehman, then the legislation Lara and Gonzalez are pushing would be unnecessary.  

"You wouldn't need a bill requiring renewal if the risk was something that an insurance company wanted to take on. You only need the bill because it's an acknowledgment that that mitigation is not enough," he says.

The more California policymakers attempt to obscure the cost of living in wildfire areas, the more property and people will be in harm's way when the next wildfire breaks out.

NEXT: A Michigan Police Task Force Is Playing Jurisdiction Games To Avoid Compensating an Innocent Man Cops Put in the Hospital

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  1. It’s the government’s irresponsible forest management that causes the risk in the first place. Just like with drug prohibition they’re throwing more laws at a problem of their own creation!

    1. Irresponsible forest management? What would that be?

      1. Duh, a band name, of course.

      2. Well everyone knows you have to rake them like they do in Finland.

      3. Not clearing dead trees and controlled burning of underbrush.

    2. In part yes. Mostly however, it’s just government screwing with markets, which never turns out well for anyone. As indicated in the piece, Florida [and to a lesser extent South Carolina] had the same exact issue. When the state forces businesses to take a loss or leave, they leave. Then the people who needed that insurance no longer have choices and sometimes they don’t have anything at all.

      Same thing with providers for cable, cell phone services, power companies, and limiting insurance providers. At best, government power only benefits the marketplace by stopping unfair competitive practices, and they don’t do that well either.

  2. I guess they must be happy with the $15.5 billion dollars lost in property, twenty-thousand people displaced, hundreds injured, and 86 dead in the Camp Fire. What, they want to a sequel?

    Some of the areas in question are hit hard by majorly-destructive fires every ten-to-fifteen years, and “fire-hardened” homes won’t stand up to 80-100 mph winds and poor land-management. Mine sure didn’t.

    1. Leave it to California legislators to make callously playing the fiddle seem pretty benign.

  3. That includes Lara, who said in a press release, that “if you have a fire-hardened home in a fire-hardened community, you should be able to get insurance and keep it.”

    Yeah, right. In other news, I understand if you like your doctor, you can keep him, too.

    1. Insurance is not a right.

      1. Looks like it is in CA – – – – – –

        1. yeah, that looks like it to me as well

  4. As usual, the central planners have to scramble for new ways to emulate the markets they hobbled, and they do it poorly and slowly.

    1. Well, it’s not their bacon in the fire if they fuck it up, now is it?

  5. First you’re complaining about not enough housing in California. Now you’re complaining about too much. Make up your mind!

  6. It’s weird, because here in flyover country, when there’s major flood damage exacerbated by government flood control levies, the people who improve the properties protected by those levies are ridiculed for building in a flood plain.

  7. If, as a politician, you can’t find a crises, for pete’s sake, manufacture one!

  8. Left CA two years ago and don’t miss it a bit.

  9. “We can’t allow insurance companies to continue to drop responsible homeowners from San Diego to the Sierras just because they can.”

    “We can’t allow California state legislators to continue to allow insurance companies to continue to drop responsible homeowners from San Diego to the Sierras just because they can just because they can.”

  10. It’s possible insurance companies are dropping profitable policies “just because they can.”

    It’s only profitable until the home is reduced to ashes.

    1. It’s only profitable until the home is reduced to ashes.

      Dropping profitable policies is never profitable.

  11. How does this state function?

  12. Next thing we know those damn greedy insurance companies will refuse to provide flood insurance for homes built below the low tide mark.

  13. Let’s see, which is it when the government allows private companies to own the means of production but controls every aspect of the economy?
    Fascism or Socialism?

    1. Californism?

  14. If government can’t give people what they want, what good is it?

    Remember, in the state where Disneyland was created, the the center of the escapist entertainment industry for a century, people BELIEVE the fantasies–and expect somebody to make it real.

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  16. Such a bill says one of 2 things — either:

    insurers are stupid, we’re smarter than them;

    or

    insurers perform a public service that needs to be done even if they must be made to operate at a loss.

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  19. If you’re a homeowner in a risky area, you aren’t responsible.

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