Is Your Home ‘Hardened’ Against Wildfire? California Works On New Standards
Sep. 16--California's insurance commissioner announced a plan to tackle the state's wildfire insurance crisis Wednesday, saying the state will collaborate with the industry to develop standards for "hardening" homes and communities against fire risk.
Commissioner Ricardo Lara said his initiative is designed to give homeowners and communities greater incentives for tamping down wildfire risks. He acknowledged it wouldn't guarantee coverage for anyone, but said it could improve conditions so insurers would return to risky, fire-prone areas.
"We are seeing much more voracious fires," Lara said on Capital Public Radio's Insight program. "We can't predict the future but what we can do is have a plan, and really understand ... what we need to do to bring down that risk.
"By doing that, we lessen the risk and keep the insurance industry within these communities," he said.
After insurers registered losses of $25 billion on California fires, they dropped 348,000 homeowners in high-risk areas from 2015 to 2018, the most recent figures available from Lara's agency. Many homeowners were forced to buy coverage from the California FAIR Plan, the state's "insurer of last resort," usually at prices double or triple what they had been paying for traditional coverage.
The problem is almost certain to get worse when the losses from 2020, already the worst wildfire season in modern California history in terms of acres burned, are totaled.
The initiative announced Wednesday represents Lara's second attempt to bring insurers back into fire-prone areas.
Earlier this year he sponsored a bill, AB 2367, that would have forced insurers to cover homeowners in communities that had been sufficiently "hardened" against wildfire risk. Insurance lobbyists fought the bill, saying they couldn't commit to selling coverage until the hardening standards had been established first.
Voluntary, collaborative approach
The bill died. Now Lara is taking more of a voluntary approach, convening a hearing in October with insurance executives and wildfire experts to develop standards for community-wide home hardening and defensible space.
Because of threats from flying embers, experts say it's not enough to harden individual homes; hardening must occur on a neighborhood or community-wide basis.
Lara said he will also require insurers to give customers greater transparency about the risk-scoring methods the carriers use to decide whether to cover someone and at what price.
The insurance industry said it welcomed Lara's approach to hardening homes and communities.
"We look forward to working with the California Department of Insurance on developing meaningful mitigation standards that actually reduce risk," said Mark Sektnan of the American Property Casualty Insurance Association in a prepared statement. "It is important to remember that insurers are only part of the equation for addressing mitigation standards. Any meaningful discussion must also include the building industry, local governments and community leaders who will be responsible for enforcing and building houses that meet the standards."
He said insurers want a rate-making model that reflects "current conditions" instead of old loss data. His association "looks forward to working with the department to streamline the regulatory process for the benefit of consumers, insurers, and the department."
There's evidence that a hardened home can withstand even the worst fires.
After the devastating 2018 Camp Fire, which destroyed more than 12,000 homes in Paradise, McClatchy found that homes built to California's strict 2008 building code, with fire-resilient roofs and other safety measures, were more likely to survive the fire.
About half the homes built in 2008 or later made it through the fire, while fewer than one-fifth of the older homes survived. Most of California's housing stock pre-dates the 2008 code, meaning there are millions of homes that would need to be retrofitted.
Gov. Gavin Newsom proposed spending $100 million on retrofits earlier this year but withdrew the funding proposal after the shutdown of the economy during COVID-19 pandemic left the state with a $50 billion budget deficit.
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