CC SR 20220816 02 - CDI Fire Insurance
CITY COUNCIL MEETING DATE: 08/16/2022
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consideration and possible action to receive a presentation from the California
Department of Insurance.
RECOMMENDED COUNCIL ACTION:
(1) Receive and file a presentation from the California Department of Insurance on the
Safer from Wildfires program and on community concerns regarding fire insurance.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Jesse Villalpando, Senior Administrative Analyst
REVIEWED BY: Karina Bañales, Deputy City Manager
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Safer From Wildfire One-Page Overview (page A-1)
B. California Department of Insurance slide presentation (page B -1)
BACKGROUND AND DISCUSSION:
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is
the consumer protection agency for the nation's largest insurance marketplace and
safeguards all of the state’s consumers by fairly regulating the insurance industry. Und er
the Commissioner’s direction, the department uses its authority to protect Californians
from insurance rates that are excessive, inadequate, or unfairly discriminatory ; oversee
insurer solvency to pay claims; set standards for agents and broker licensing; and perform
market conduct reviews of insurance companies; resolve consumer complaints; and
investigate and prosecute insurance fraud.
In the wake of destructive fire seasons, homeowners in areas of California that are at high
risk for wildfires have reported losing their homeowners’ insurance or seeing their
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premiums skyrocket. As a result, many have been left to seek expensive, limited coverage
through the California Fair Access to Insurance Requirements (FAIR) Plan as a last
resort. In response to this trend, in February 2021, Insurance Commissioner Ricardo Lara
and emergency management leaders in Governor Newsom's Administration announced
Safer from Wildfires, a new insurance framework incorporating wildfire safety measures
to help save lives while making homes and businesses more resilient. This is the first time
state agencies have been brought together to identify mitigation actions that insurance
companies should consider for existing homes and businesses.
Safer from Wildfires provides a list of achievable, effective actions that will help reduce
the risk for property owners, including community-wide safety recommendations to
prevent the spread of wildfire to other properties. The interagency partnership took a
“ground up” approach, meeting with first responders, consumers, and researchers to
identify a consistent approach with three layers of protection — for the structure, the
immediate surroundings, and the community. Safer from Wildfires includes community-
wide approaches that can help prevent wildfires from catching and spreading to other
homes and businesses in the neighborhood.
The framework consists of three pillars: protecting the structure by installing fire-resistant
vents and upgraded windows; protecting the immediate surroundings such as through the
creation of defensible spaces around a home; and working together as a community by
creating evacuation plans and keeping communication with local or state fire agencies.
The full list of proposed mitigation actions is available to download from the Department
of Insurance website. Additionally, a one-page fact sheet overview of the Safer From
Wildfire Framework is included in this report as Attachment A .
While California has existing wildfire building standards for new development as
established by Cal Fire, this partnership established a framework that is consistent, based
in fire science, and applies to retrofits for older existing homes to help them seek and
maintain insurance coverage, giving policyholders and insurance companies a shared
strategy for reducing wildfire risks.
In conjunction with Safer from Wildfires, Commissioner Lara is working to increase wildfire
safety insurance incentives for consumers. Currently, more than a dozen insurance
companies offer discounts for safer homes and communities, and more companies are
expressing interest. The amount of interest from insurance companies to offer mitigation
discounts has grown from just 7% of the market just three years ago. A list of insurance
companies currently offering discounts is available on the Department of Insurance
website
Although the City of Rancho Palos Verdes has not experienced a major wildfire in more
than a decade, the City has received anecdotal reports of residents losing their fire
insurance or seeing their premiums increase due to the City’s vulnerability to fires. This
issue was explored in a September 2019 staff report.
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Zuleimy Delgadillo, Outreach Analyst with Department of Insurance, has confirmed her
attendance at tonight's meeting to provide the Council with an update on the Safer from
Wildfires framework the department is developing and to address residents' concerns
about losing their fire insurance or having their premiums increase. (Attachment B)
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CALIFORNIA _ • Commission Public Utilities
Safer from Wildÿres in 2 31
Safer from Wildÿres is an interagency partnership between Insurance Commissioner Ricardo Lara and the
emergency response and readiness agencies in Governor Gavin Newsom’s administration to protect lives,
homes, and businesses by reducing wildÿre risk.
With California experiencing devastating, climate change-intensiÿed wildÿres, homes and businesses need insurance they can rely on.
Commissioner Lara is using every tool available to improve insurance for our communities. Drawing on the direct experience of ÿrst responders
and the latest research on wildÿres, the partnership created a consistent approach to reducing risk with a list of achievable and e°ective actions
to help make existing homes and businesses safer from wildÿres. The ultimate goal is protecting consumers by reducing wildÿre risk in their
communities, making insurance available and a°ordable for all Californians.
This “ground up” approach for wildÿre resilience has three layers of protection — for the structure, the immediate surroundings, and the
community — to prevent wildÿres from catching and spreading to other homes and businesses in the neighborhood.
• Class-A Fire rated roof
• Maintain a 5 foot ember-resistant zone around a home
(including fencing within 5 feet)
• Noncombustible 6 inches at the bottom of exterior walls
• Ember and fire-resistant vents (See Low-Cost Retrofit List,
and Chapter 7A)
• Upgraded windows (Double paned or added shutters)
• Enclosed eaves
Protecting the structure 1 Working together as a community 3
• A community should have clearly deÿned boundary and a local
risk assessment in consultation with the local ÿre district or state
ÿre agency; an identiÿed evacuation route, cleared of vegetative
overgrowth, and evacuation plan contingencies; clear funding
sources to implement community mitigation activities and
meet clear risk reduction goals; and integrated and up-to-date
local planning documents pertinent to community wildÿre risk.
• Current examples include the Fire Risk Reduction Community
designation under development by the Board of Forestry,
Firewise USA communities in good standing, and
Shelter-in-Place designations.
Commissioner Lara is working to increase available
incentives for wildÿre safety. To view the list of insurance
companies currently offering discounts visit
insurance.ca.gov.
• Cleared vegetation and debris from under decks
• Removal of combustible sheds and other outbuildings
from the immediate surroundings of the home, to at least
a distance of 30 feet
• Defensible space compliance (including trimming trees,
removal of brush and debris from yard, and compliance
with state law and local ordinances)
Protecting the immediate surroundings 2
A-1
CALIFORNIA DEPARTMENT OF
INSURANCE
Zuleimy Delgadillo
Outreach Analyst
Wildfire Actions
1B-1
ROLE OF INSURANCE COMMISSIONER
RICARDO LARA
▪Protect consumers
▪Maintain insurer solvency
▪Set standards for agents and broker licensing
▪Perform market conduct reviews of insurance
companies
▪Resolve consumer complaints
▪Investigate and prosecute insurance fraud
▪Cannot require or compel insurance companies to
sell insurance
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B-2
Met with more than
25,000 people
to hear wildfire and
insurance concerns
through
60 virtual
events in
40 counties
Since 2019
What CDI Has Done
3 B-3
Progress Report
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•Removed barriers to allow wildfire survivors to
receive critical insurance benefits
•Coverage for evacuation expenses
•Extensions to additional living expenses
•Created disclosures and coverage to meet
upgraded building codes
•One year moratorium from non-renewals (More than
4 million policyholders protected)
•Increased non-renewal notice from 45 to 75 days
B-4
Improving the FAIR Plan
$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
Businessowners Commercial Property Dwelling CoverageCoverage Limits (Millions)1990s 2022
5 B-5
Launched in January 2022, Safer from Wildfires is
an interagency partnership between Insurance
Commissioner Ricardo Lara and the state’s
emergency response and readiness agencies to
protect lives, homes, and businesses by reducing
wildfire risk.
B-6
7 B-7
8 B-8
9 B-9
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Regulations to lower costs and
increase transparency
•Require insurance companies to factor consumers’ and
businesses’ wildfire safety actions into their pricing
•Provide consumers with transparency about their “wildfire
risk score”that insurance companies assign to properties
•Give consumers the right to appeal their risk determination
•Public hearing was April 13 —regulations expected to be in effect
by summer 2022
B-10
•The number of homeowners non-renewed
by insurance companies fell by 10 percent
statewide in 2020 compared to the previous
year —a decrease of 22,870 policies.
•Premium discounts now available to 2 out of
every 5 consumers, with up to 20 percent
discounts for wildfire-hardened homes –6x
increase since 2019
It Is Working!
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B-11
QUESTIONS?
12B-12