Governor approves public wildfire catastrophe model

California state capitol building in Sacramento.
California state capitol building in Sacramento.

Takeaways:

  • Public cat model will be alternative to insurers' proprietary models
  • FAIR Plan bonds will increase liquidity and fund claims payments
  • Grants for fire-safe roofs and fire mitigation

California's governor has signed several measures passed by the state legislature intended to address the state's wildfire-fueled insurance crisis.

On October 10, Gov. Gavin Newsom signed SB 429, the California Wildfire Public Catastrophe Model Act, passed September 17, to establish a public wildfire catastrophe model as an alternative to insurers' proprietary risk models that have led to higher rates.

Dave Cortese
California state senator Dave Cortese

"Homeowners shouldn't be left in the dark about how decisions about their insurance are made," stated Sen. Dave Cortese, author of SB 429, in a press release. "[It] will create the nation's first wildfire public catastrophe model to help homeowners understand whether they're getting a fair deal, and it will give communities, local governments, and first responders better tools to prepare for and respond to wildfires. When homeowners know their wildfire risk, they can take meaningful steps to reduce it, protecting their property and lowering their insurance costs."

Carmen Balber - Consumer Watchdog - from screenshot.jpg
Carmen Balber, executive director of Consumer Watchdog.
Consumer Watchdog

Carmen Balber, executive director, Consumer Watchdog, stated in a press release, "Homeowners are fed up with insurance companies' black-box models that penalize consumers for fire risk but refuse to explain how they calculate it. A fully transparent wildfire model will level the playing field and empower consumers to keep their insurance and make their homes and communities safer."

The governor also signed five other bills, including AB 226, the California FAIR Plan Association bill. The FAIR Plan bill authorizes a bond issue to increase the liquidity of the state's insurer of last resort, and its ability to pay claims. The other bills signed are:

  • SB 495, Eliminate "The List" Act. This bill requires insurers to pay policyholders 60% of personal property coverage limits in a declared emergency, without having to submit a detailed inventory list. The bill also gives consumers at least 100 days to submit proof of losses to their insurer.
  • SB 547, the Business Insurance Protection Act. Extends the Wildfire Safety and Recovery Act of 2018 prohibition on non-renewals of residential property insurance for one year, to also apply to commercial policies, covering businesses, homeowners' associations (HOAs), condominiums, affordable housing units, and non-profits.
  • AB 888, the California Safe Homes Act. Establishes a grant from the California Department of Insurance (CDI) to help residents get new or replacement fire-safe roofs and to implement fire mitigation measures.
  • AB 1, the Insurance and Fire Safety Act. Requires CDI to regularly review Safer from Wildfires regulations to reflect advances in science, safety and mitigation.

In a related development, Consumer Watchdog is supporting an Insurance Policyholder Bill of Rights, a ballot measure for November 2026. According to polling that the organization commissioned from FM3 Research, nine out of ten voters are concerned about insurers canceling their coverage or raising premiums, and eight out of ten voters support the protections in the ballot measure.

Related stories:

Newsom explores public insurance subsidy, litigation limits

Regulator plans crackdown on advocates fighting rate increases

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