California Wildfire Bills Expire as Legislature Recesses, But One Bill Expected to Return

Several major wildfire bills were left on the table when the California Legislature ended its session earlier this week, but one bill is expected to make a comeback in some form.

Assembly Bill 2167, authored by Assemblyman Tom Daly, D-Anaheim, would have established the Insurance Market Action Plan program, or IMAP program, under which residential property insurance policies in a county may qualify for IMAP protection.

The bill had kicked off a battle between opponents who saw it as a direct attack on insurance consumer protections and proponents who said it was the best way to make insurance more available in an increasingly wildfire-prone state.

The bill was supported by the insurance industry, including the Personal Insurance Federation and the American Property Casualty Insurance Association. It was also being backed by the California Association of Counties, CalFIRE’s union and Fire Safe Councils of California.

“I think the issue will continue to be revisited,” said Mark Sektnan, vice president for state affairs of the APCIA, said on Wednesday.

Sektnan said the Legislature had a full plate with COVID-19 matters, and also had spent money in the budget last year to beef up the state’s firefighting tools.

He also noted that people with homes in these areas recently devastated by wildfires supported the bill.

Supporters said the bill would have provided homeowners in wildfire zones access to more choice and competition among insurers based on price and coverage while avoiding costly and more limited FAIR Plan coverage.

The Consumer Federation of America, however, estimated the bill would lead to rate increases of 40%.

California Insurance Commissioner Ricardo Lara, who has called the bill an “insurance industry wish list, with nothing to help consumers,” said it was an attack on insurance consumer protection law Proposition 103.

AB 2167 would have required an IMAP filing submitted to the California Department of Insurance by an insurer to include elements such as a request for adequate rates, a plan for maintaining solvency of the insurer and mitigation requirements.

It would have also required an insurer that submits an IMAP filing to receive an expedited review of its rate filing, if the insurer uses an actuarial assumption for trend and loss development that is at the midpoint or less of rate impacts, or files for a rate increase based solely on increased reinsurance costs, and does not change any other aspect of its rate filing from its previous department approved rate.

The bill called for ensuring insurance rates are adequate to avoid insurer insolvencies and to permit insurers to operate in the state’s highest risk areas, reducing the number of residents that are required to rely upon the California FAIR Plan, incentivizing insurers to seek cost-based rates in exchange for assurances that they will serve high-risk communities at levels similar to their statewide presence and developing systems of accountability for individual and community-based loss mitigation efforts.

A bill that Lara backed, Assembly Bill 2367, failed to advance out of committee, and would have required insurers to sell coverage to homeowners who’d taken mitigation steps like fireproofing roofs and retrofitting vents.

Another bill that went by the wayside was Assembly Bill 1659, which would have raised $2.5 billion to address wildfire risks.

Lara in a statement responding to the legislative inaction on some of the wildfire bills said he’d heard from “thousands of residents” in high risk counites that too many people are paying more for insurance with no guarantee it will be there for them in the future.

“While Governor Newsom and the Legislature have made progress in reducing wildfire risks on public lands over the past year, insurance must play a much larger role in protecting Californians in their homes and communities,” Lara said. “I will continue to advocate for statewide home hardening standards to reduce the spread of wildfires into communities and bring down statewide wildfire risk. Without consistent, science-based standards, consumers and local governments are left to devise their own mitigation plans. If Californians do our part to protect homes from wildfire, I believe insurance companies must match them with a commitment to provide coverage.”

Sektnan said to expect addressing wildfires to be a big priority when the Legislature returns.

“I think the whole envronment needs to be reassessed,” he said. “We’re in what is called a new normal. Wildfires are bigger, they are becoming more costly and they are occurring earlier in the year.”