March 20, 2025

California counties have learned tough lessons in times of crisis and following disasters. Recognizing the detrimental impacts to counties created by a lack of available and affordable insurance options, the CSAC Insurance Working Group has been tracking the California Department of Insurance’s progress in reforming the homeowners wildfire insurance market. Yesterday, Insurance Commissioner Ricardo Lara gave a highly anticipated testimony to the Assembly Insurance Committee with the purpose of updating the Legislature on the progress of the Sustainable Insurance Strategy (SIS) following the 2025 Los Angeles County Wildfires. 

Introducing the SIS in 2023, the Insurance Commissioner highlighted the completion of regulations late last year necessary to transition on to the implementation phase:

• Catastrophe Modeling Regulation, which allows insurance carriers to use catastrophic modeling in their rate filing utilizing current data. To utilize the modeling, insurance companies must commit to increasing their coverage in wildfire distressed areas. CSAC advocated for transparency throughout the ratemaking process, with consideration to wildfire mitigations, crucial to achieving more affordable policies and ultimately depopulating the FAIR Plan.
• California Only Net Cost of Reinsurance, which incorporates reinsurance cost in the rate making process with the goal of writing comprehensive policies in wildfire distressed areas equivalent to no less than 85% of their statewide market share.
• Complete Rate Application Regulation, which changes the submission requirements of property and casualty insurance rate applications.

The SIS is further intended to depopulate the California Fair Access to Insurance Requirements (FAIR) Plan and cover distressed areas across the state. Incorporating data from 2023, the number of residential counties identified as distressed has increased to 29 as of March 6, 2015.

Echoing the message of the importance of aligning statewide efforts to tackle the insurance crisis, the following are a few legislative measures supported by the Commissioner:            

• AB 1 (Connolly), would require CDI to consider updating the Safer from Wildfire regulations to include home hardening in the regulations on or before January 1, 2030. CSAC Supported.
• AB 226 (Calderon), would allow the California Fair Access to Insurance Requirements Plan (FAIR Plan) to access bond funding from the California Infrastructure and Economic Development Bank (IBank). CSAC Supported.
• SB 495 (Allen) Sponsored by CDI, would require insurers to pay 100% of contents coverage without an inventory list.

CSAC will continue to follow the reformation of the homeowners insurance market, utilizing the CSAC Insurance Working Group Policy Priorities to advocate for transparent implementation of the Sustainable Insurance Strategy. While simultaneously advocating for comprehensive legislative measures aimed at rebuilding communities after a disaster.

For questions, please contact Catherine Freeman, cfreeman@counties.org or Amber Garcia Rossow at arossow@counties.org.