Editorial: Don’t subsidize state plan offering fire insurance to those without coverage

With risks higher than ever, the companies that offer fire insurance are deciding not to renew a larger number of California policies. State statistics show 14,225 policies were not renewed in 2018, a 14% increase from 2017. This led state Insurance Commissioner Ricardo Lara to announce changes this week in FAIR, the state's Fair Access to Insurance Requirements Plan. It's an insurance pool funded by insurance companies' fees that offers last-resort coverage to homeowners without policies.

Lara said that next year, FAIR policies will cover up to $3 million in losses — double the current maximum — and would begin covering water damage and personal liability in addition to fire damages. A spokesman for Lara said this was primarily meant to benefit existing homes whose owners were scrambling because "the world's changed around them" — not to encourage building in risky areas.

So long as these policies are correctly priced based on risk factors and not subsidized directly by taxpayers or indirectly by the millions of Californians able to get property insurance, they are appropriate. The policies should require owners to create fire-resistant defensible space by homes.

But in light of Lara's recent campaign contribution scandal and past posturing, watchdog agencies should keep close tabs on changes he makes. As a state senator, he depicted insurers who canceled policies as the problem — not the mega-fires that threatened to bankrupt the companies because so many homes are in fire-prone areas. Climate change means greater fire risk — and little room for error.

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