California lawmakers have introduced a series of bills designed to stabilize the state’s property insurance market, which has faced significant challenges in recent years, particularly due to the increasing frequency and severity of wildfires.
Senate Bill 547 seeks to extend the existing one-year nonrenewal and cancellation moratoriums to commercial properties located in or near fire perimeters following a state of emergency declaration. This extension would encompass homeowner associations, condominiums, affordable housing units, and nonprofits, according to information from the California Department of Insurance (CDI).
Senate Bill 525 aims to expand the California FAIR Plan to include manufactured homes, achieved by modifying the definition of “basic property insurance.” Furthermore a notable component of the proposed legislation is the creation of the Community Hardening Commission, to function as an independent unit within the CDI. This commission would be tasked with developing wildfire community hardening standards and providing strategic recommendations, convening at least quarterly. The proposal mandates consultation with various stakeholders, including the insurance industry and public safety districts. The commission is slated to deliver the new standards, along with a report outlining further steps needed to support mitigation efforts, to the legislature by July 1, 2027.
Simultaneously, the CDI is given the same deadline to devise guidelines for state and local agencies to aggregate and disseminate wildfire risk data utilizing a data-sharing platform, as outlined in Senate Bill 616. These legislative efforts align with other previously introduced reform measures, including the FAIR Plan Stabilization Act and the California Safe Homes Act, as well as claims-handling reforms.
Insurance Commissioner Ricardo Lara has expressed support for these proposals, stressing the significance of addressing wildfire recovery and mitigation efforts. Commissioner Lara stated, “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.” The Commissioner added, “Bold actions will yield bold results.”
Attempts to obtain comments from the Personal Insurance Federation of California and several lawmakers sponsoring the bills were unsuccessful. However, the urgency of the situation is clear, particularly in light of recent events.
The recent wildfires that devastated Los Angeles are considered the most destructive wildfires in the state’s history highlighting the need for decisive action.
California Governor Gavin Newsom has asked Congress to approve approximately $40 billion in aid to aid in the recovery of the affected areas. In a letter to Congress the Governor wrote, “Make no mistake, Los Angeles will use this money wisely… California will ensure that funds will serve individuals, communities, property owners and businesses that suffered losses from these devastating fires.”
