After ten years of enormously destructive and increasingly severe fire seasons, the 2020 fire season in California has been the worst one yet. Over the past decade, California has seen 8 of its 10 biggest fires in its history. So far, 3.2 million acres have burned in California just this year, far surpassing the records of previous seasons.  Aside from the obvious destruction of the burning itself, which often takes place in more rural, wild areas, the smoke from the wildfires has created the poorest air quality that California cities, such as Los Angeles and San Francisco, have seen in decades. With the devastation, California wildfire insurance issues have risen to the top of insurers minds.

Average temperatures in California have been rising for the past one hundred years, with the hottest recorded temperature being reached in Los Angeles County on September 6^th at a whopping 121 degrees.  Extreme heat resulting in vegetation drying out and lack of rain have made the perfect condition for rampant and quick spreading fires.

These large-scale fires have created quite the conundrum for property owners and insurers on how best to pay for the damage that results.  Towards the beginning of this string of severe fire seasons, the insurance industry started to drop homeowners’ insurance policies in those areas hardest hit by fire.  However, the state insurance commissioner is now pushing for passage of legislation that can create a program to offset the increasing premiums by providing discounts for those who mitigate their risk from wildfire.

On October 19, 2020, the Department of Insurance is hosting a hearing for experts in the industry, insurers, and homeowners to voice their opinions regarding Commissioner Ricardo Lara’s plan to create regulations that will accelerate the rate that some homeowners see increases to their premiums and give the attendees more information on how the risk of their property is calculated.  Commissioner Lara also wants this to be an opportunity to help homeowners reduce their risk.  With projections that climate change will continue to worsen the yearly California fire season, it is important for homeowners, commercial property owners, and insurers to evaluate their risk and identify ways to address it.

Commissioner Lara is hoping that this will be the start to a more transparent and open system of communication between insurers and homeowners.  Whereas before, homeowners would sometimes be caught of guard with a letter in the mail notifying them that their policy had been cancelled due to increased risk of fire in their area, this plan would require insurers to explain their standards to their insureds on best practices for hardening their home and other mitigation tactics.

It will be important for all interested parties to remain educated on the progression of this proposed project and to engage whenever possible.  Smart mitigation and risk management can protect existing homes and structures in high fire risk areas while providing an incentive for insurers to keep renewing policies for the property.  As fires continue to burn, it will be important for insureds to work with their insurers to find the best solution.