CC SR 20230221 03 - Home Fire Insurance Information and ResourcesCITY COUNCIL MEETING DATE: 02/21/2023
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA TITLE:
Consideration and possible action to receive a report on resources available for wildfire
residential property insurance coverage for Rancho Palos Verdes residents.
RECOMMENDED COUNCIL ACTION:
(1)Receive and file a report on resources available for wildfire residential property
insurance coverage for Rancho Palos Verdes residents;
(2)Direct Staff to pursue the City’s participation in the National Fire Protection
Association’s “Firewise USA” program and the Fire Risk Reduction Community
designation developed by the state’s Board of Forestry and Fire Protection ;
(3)Coordinate with the City's Emergency Preparedness Committee in the drafting
and mailing of a residential fire insurance information and resources letter to all
households, including a survey of residents regarding the affordability and
availability of homeowner insurance for future City Council consideration.
FISCAL IMPACT: The cost for printing, envelopes, and postage to mail out the Fire
Insurance and Resources Letter to every household is estimated to be approximately
$8,000 which is funded in the FY 2022-23 budget.
Amount Budgeted: $22,000
Additional Appropriation: N/A
Account Number(s): 101-400-1430-5101
(General Fund – Emergency Preparedness/Prof.& Tech.Srvc)
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.Section 2644.9 of title 10 of the California Code of Regulations - Consideration of
Mitigation Factors; Wildfire Risk Models (page A-1)
B.California Department of Insurance Press Release (page B-1)
C.Statewide Data Fact Sheets for new, renewed, and non-renewal data collected
by CDI from 2015 to 2021 (page C-1)
D.CDI Top Ten Tips for Finding Residential Insurance (page D-1)
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BACKGROUND:
In recent years, catastrophic wildfires have become more frequent and destructive,
wreaking havoc on communities throughout California and causing devastation to
families, homes, and livelihoods. Many California homeowners and residents are
increasingly at risk from wildfires. This increasing risk has resulted in problems for the
state's insurance markets, as evidenced by rising premiums and deductibles, coverage
reductions, and even policy cancellations. As more communities experience devastation
from wildfires, there is an increasing need to ensure adequate insurance is available.
Over the past several years, the City has received correspondence from the public
expressing concerns with residents losing their residential fire insurance or seeing their
premiums increase as a result of the City's susceptibility to fires. This issue was first
explored in a September 2019 staff report. An update on this topic was requested at the
October 18, 2022 City Council meeting.
This report provides background information and an analysis of insurance coverage in
California, analyzes policy nonrenewal rates for Rancho Palos Verdes at the ZIP code
level (90274-90275), summarizes current legislation intended to address these issues,
compiles a comprehensive list of resources and tools to assist residents in obtaining fire
insurance, and makes Council-level recommendations to address the City's insurance
nonrenewal affordability problem.
DISCUSSION:
Wildfire Insurance in California
The California Department of Insurance (CDI), established in 1868, is the agency
charged with overseeing insurance regulations, enforcing statutes mandating consumer
protections, educating consumers, and fostering the stability of insurance markets in
California. The CDI has authority over how the insurance industry conducts business
within California and licenses and regulates the rates and practices of insurance
companies, agents, and brokers in the state.
In California, the majority of households cover their primary residences with standard
homeowners’ insurance policies from "admitted" market insurers, i.e., those who comply
with the CDI regulations and guidelines. Admitted insurers sell the majority of insurance
policies; these are the well-known brands that advertise their services on radio and
television. For an admitted insurance company to change its rates, it must receive
authorization from the CDI. Homeowners who believe a claim has been improperl y
handled can appeal this decision with the CDI.
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When homeowners cannot obtain coverage on the admitted market, they may seek
coverage from "non-admitted" insurance carriers (also known as surplus lines carriers)
who can insure otherwise uninsurable specialty risks. Non-admitted carriers are not
required to file their rates with the CDI, allowing them to price risks based on their
specific risk exposure. A current list of approved surplus line insurers can be found at:
http://www.insurance.ca.gov/01-consumers/120-company/07-lasli/lasli.cfm
The California FAIR Plan Association (FAIR Plan) is a "last resort" option for
homeowners who have been unable to find a company willing to sell them a standard
policy. The FAIR Plan provides basic fire coverage to households that are unable to
obtain coverage through these traditional markets. A FAIR Plan policy protects your
home against the risk of fire and satisfies the mortgage company's requirement that
your home be insured. However, it does not cover theft, flood, earthquake, hail,
vandalism, or personal liability. As the insurer of last resort, the California FAIR Plan
should only be considered after a diligent search for coverage in the traditional
insurance market. The California FAIR Plan website contains a tool which will assist in
locating an agent or broker.
For additional information on better understanding homeowners’ or renters’ insurance is
available in the CDI's Residential Insurance information Guide.
Insurance Availability and Affordability
Wildfires have posed an unprecedented threat to Californians and others around the
world in recent years. In response to this extreme risk, insurance companies have
increased premiums and canceled coverage altogether in areas with a high fire risk.
Since 2018, CDI has collected annual counts of new, renewed, and lapsed homeowners
and dwelling fire policies from admitted insurance companies to better comprehend
statewide and regional trends in residential insurance markets facing wildfire risks. Also
collected are annual counts of California FAIR Plan policies and total counts of surplus
lines policies.
CDI collects data from insurance companies, and in some cases directly from California
businesses, and makes it available through a public website.
Statewide Data Fact Sheets for new, renewed, and non-renewal data collected by CDI
from 2015 to 2021 (Attachment C) provide the opportunity to review multi -year trends
for residential insurance non-renewals and FAIR Plan policy numbers. The recent data
collected by CDI indicates that obtaining insurance in high-risk areas for wildfires is
becoming more difficult.
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Annual nonrenewal data for residential policies shows an overall upward trend between
2015 and 2021, with some fluctuations for insurer-initiated non-renewals year-to-year.
Specifically, data from 2021 shows an elevated total number of non-renewed policies in
the admitted insurance market when compared to the years prior to 2019.
Insurance company initiated non-renewals increased in 2021 after previous-year
declining in 2020, while consumer-initiated non-renewals show an upward trend over
multiple years since 2015. Following a decline in 2020, insurance company-initiated
non-renewals increased in 2021, while consumer-initiated non-renewals have shown an
upward trend since 2015, spanning multiple years.
4
Statewide, from 2019 to 2021, the number of new FAIR Plan policies remained elevated
relative to 2015 to 2018. However, in 2021, there were approximately 10,000 fewer new
FAIR Plan policies written than in the previous year.
As of the end of December 2021, FAIR Plan policies made up 3% of the total number of
policies (including surplus lines) of overall residential insurance policies in California, a
percentage that has been increasing incrementally, by about a half a percenta ge point
per year since 2018, when FAIR Plan policies were 1.6% of the overall market.
Attachment C provides a full breakdown of the data, including for areas that have
geographic indications of wildfire risk
CDI Wildfire Insurance Regulations Incentivizing Home Hardening
With wildfire danger threatening the liquidity and solvency of insurers, CDI has
implemented new regulations that now require insurers to assess the wildfire risk of
their customers’ properties and provide insurance discounts to those with safer
properties to incentivize risk reduction on covered properties and neighborhoods
(Section 2644.9. of the California Code of regulations for the Consideration of Mitigation
Factors; Wildfire Risk Models was enacted on October 14, 2022). Under the new
regulations, all admitted insurance carriers in California must recognize and reward
wildfire safety and mitigation efforts made by homeowners.
The regulation incorporates the Safer from Wildfires framework, created in February
2022 by a first-ever partnership between the CDI and the emergency preparedness
agencies in Governor Newsom’s Administration, including the California Department of
Forestry and Fire Protection (Cal Fire), the Governor’s Office of Emergency Services
(Cal OES), the Governor’s Office of Planning and Research, and the California Public
Utilities Commission.
The regulation requires insurance companies to submit new rates that recognize the
benefit of safety measures such as upgraded roofs and windows, defensible space, and
community-wide programs such as Firewise USA and the Fire Risk Reduction
Community designation developed by the state’s Board of Forestry and Fire Protection,
which currently includes the counties of Los Angeles, Santa Barbara, and Butte as well
as cities and local districts.
The new regulations mandate consumer discounts for those property owners who can
show proof of mitigation measures on their property. The regulations will apply to all
insurance companies that use wildfire risk factors in determining premiums rates.
Insurers will be required to submit their Wildfire Risk Models to the CDI for approval
within 180 days of the date this new section is filed with the Secretary of State.
The mandatory factors that insurance companies must consider in their Wildfire Risk
model include:
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Mandatory Factors
No insurer shall use a rating plan that does not take into account and reflect the
following mandatory factors:
• Community-level mitigation efforts.
• Property level mitigation efforts such as clearing vegetation and debris around
the property and any movable combustible objects.
• Building hardening measures such as Class-A fire rated roof, enclosed eaves,
fire-resistant eaves, multipaned windows, and at least six inches of
noncombustible vertical clearance at the bottom of the exterior surface of the
building.
Optional Factors
In addition to the mandatory factors listed above, a number of optional factors may
be considered by insurance companies in formulating their risk rating plans as well.
These optional factors are summarized below:
• Fuel: Accounts for combustible materials surrounding the structure.
• Slope: Position of the structure on a slope in relation to potential sources of
ignition, as well as the steepness of the slope between the potential sources
of ignition and the structure.
• Accessibility: Accessibility reflects the ease or difficulty with which firefighting
personnel and equipment can reach structures threatened by wildfire.
• Aspect: The direction of the slope relative to the orientation of the structure.
• Structural Characteristics: materials used in construction; distinctive
characteristics of the home that may increase or decrease fire risk.
• Other community-level or property-level mitigation efforts, or designations, as
recommended by a state or local fire safety agency or organization as
reducing wildfire risk.
New Requirements for Insurance Companies
Insurance companies will also be required to submit any documents associated with
formulating the fire risk rating plan to the CDI upon request. Any rate application must
include the insurer’s own California wildfire loss data if it supports or informs their rating
system for insurance policies. In addition, the insurer must provide to the policyholder or
applicant, in writing, their wildfire risk score or classification no later than 15 days after
an application is submitted, 45 days prior to any renewal, 75 days prior to any
nonrenewal, or following a mitigation measure by the policyholder and a request for
reconsideration, within 30 days of receiving that request.
The full text of the regulations can be viewed on the CDI website.
6
Wildfire Residential Property Insurance Coverage for Rancho Palos Verdes
Staff contacted CDI to obtain a comprehensive view of the number of residents who
were unable to renew their home fire insurance policies in part due to the City's fire
susceptibility. In response to this request, CDI staff provided the following data on the
number of new, renewed, and lapsed policies for Rancho Palos Verdes residents for zip
codes 90274 between 2015 and 2021:
Below is a table detailing the number of new, renewed, and lapsed homeowner's
insurance policies in Rancho Palos Verdes for zip code 90275 between 2015 and 2020:
Data between 2015 and 2021 shows the average number of insurance company-
initiated non-renewals for Rancho Palos Verdes was approximately 173 homes per
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year. Overall, the data indicates an elevated total number of non-renewed policies in the
insurance market when compared to the years prior to 2019. Insurance company
initiated non-renewals increased in 2021 after previous-year declining in 2020, while
consumer-initiated non-renewals show an upward trend over multiple years since 2015.
Following a decline in 2020, insurance company -initiated non-renewals increased in
2021, while consumer-initiated non-renewals have shown an upward trend since 2015,
spanning multiple years.
Residential Insurance Resources
California Department of Insurance
The CDI provides a number of tools on its website (www.insurance.ca.gov) to help
consumers understand home/residential insurance so that they can make the best
decision for their situation, including informational guides, a premium comparison tool,
and a new coverage comparison tool that allows consumers to compare differences
between insurance policies offered by insurers which can be found here.
Residents are encouraged to contact the CDI with any home fire insurance questions
they may have. Additionally, the CDI is available to provide additional resources and
guide residents through dealing with their insurance companies.
Email: ombudsman@insurance.ca.gov
Phone: (916) 492-3457
A list of resources offered by CDI has been compiled together below for your
convenience:
• Residential Insurance Company Contact List (Provides toll free numbers for over
50 insurers that are licensed to sell homeowners insurance).
• Insurers Currently Offering Discounts for Fire Hardened Homes (Residential
Property Insurance Companies Currently Offering Discounts for Fire Hardened
Homes and/or Communities)
• Homeowners Coverage Comparison Tool (Provides information about the
differences between insurers' policy contracts and coverage summary).
• Homeowners Premium Comparison Tool (Provides a general cost comparison
between insurers and lists insurers offering the coverage selected).
• Home Insurance Finder (Online service allows you to find insurance companies
identified to sell homeowners, renters, condominium, or mobile home insurance).
• Insurance Company Profile Search (Provides access to information about a
insurance company's location, complaint history, and financial information.
• Residential Informational Guide (CDI provided information to help you with the
purchase of residential insurance, what you may need to know, and related
information).
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Recommendations For Community-Level Mitigation
As noted above, through the adoption of the new set of regulations incentivizing home
hardening efforts, the CDI has mandated that insurance companies conducting
business in the state offer discounts on residential property insurance when
policyholders reduce their exposure to wildfire risk. The menu of creditable activities
includes participation in the Firewise USA recognition program and the Fire Risk
Reduction Community as a form of community-wide mitigation.
Participation in the NFPA “Firewise USA” program
The Firewise USA® Recognition Program was initiated by the National Fire Protection
Association (NFPAp) in 2002. The national Firewise USA recognition program provides
a collaborative framework to help neighbors in a geographic area get organized, find
direction, and take action to increase the ignition resistance of their homes and
community and to reduce wildfire risks at the local level. The basis behind the Firewise
USA program is focused on voluntary citizen participation to take responsibility of
achieving wildfire prevention activities to reduce the vulnerabilities of wildfire impacts to
their community.
Any community that meets a set of voluntary criteria on an annual basis and retains an
“In Good Standing Status” may identify itself as being a Firewise Site. Currently there
are almost 1,800 communities around the country who have received this recognition.
Rancho Palos Verdes is not one of the listed communities . The prevention work
employing Firewise principles that has been completed by residents in these
communities has provided positive benefits during recent wildfire events. Additional
information on the Firewise USA Program is Available here:
Rancho Palos Verdes Participation in the Fire Risk Reduction Community List
Public Resources Code 4290.1 requires the Board of Forestry and Fire Protection to
develop and maintain “a list of local agencies located in a state responsibility area or
very high fire hazard severity zone...that meet best practices for local fire planning."
This list is published on the Board’s website and updated every two years thereafter.
The 2022 iteration of the Fire Risk Reduction Community List is available here for
download. Details of list eligibility and the application process can be found in 14 CCR
1268.00-1268.04. The Board’s regulations include details on criteria that local agencies
must meet in order to qualify for the list. The application will next reopen in early 2024.
Staff recommends that the City Council direct Staff to pursue the City’s participation in
the National Fire Protection Association’s “Firewise USA” program and the Fire Risk
Reduction Community designation developed by the state’s Board of Forestry and Fire
Protection.
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Issuing a residential Fire Insurance resources letter and Community Survey
In support of gathering public input and gaining insight from residents who have
experienced premium increases and decreased homeowner insurance coverage, it is
suggested that Council direct staff to coordinate with the City's Emergency
Preparedness Committee (EPC) to draft and mail a residential Fire Insurance
Information and Resources letter to all households. Along with this letter, Staff and the
EPC will distribute a community survey to solicit feedback from the general public on the
issue of citywide fire insurance. The community survey will be presented prior to
distribution for City Council review and consideration.
The distribution of the community survey can serve as a crucial instrument for collecting
public feedback that would not be readily available or exhaustive otherwise. Staff and
the EPC will analyze the information and data gathered from the community survey and
report back to the Council at a later date with the survey results.
ADDITIONAL INFORMATION:
CalFire’s Update to the Local Responsibility Area (LRA) Fire Severity Maps
Currently, CalFire is seeking public input on updates to the State Responsibility Area
(SRA) fire severity maps. As part of the adoption process of the map, the public may
submit written comment at the address below or through email at
FHSZcomments@fire.ca.gov. Written comments may be submitted by U.S. mail to the
following address: Office of the State Fire Marshal C/O: FHSZ Comments California
Department of Forestry and Fire Protection P.O. Box 944246 Sacramento, CA 94244 -
2460. The public comment period now totals 110 days and closes on April 4, 2023.
Information about how to submit public comment is available on Cal FIRE’s website.
Staff will continue to monitor this issue.
As for the LRA, on, February 15 staff will participate in a Fire Hazard Severity Zone Map
Roundtable hosted by the league of California Cities. This is an opportunity to connect
with cities regarding local impacts from Cal FIRE’s updated Fire Hazard Severity Zone
State Responsibility Area Map. Cal FIRE also released new information about the data
input relied upon for the maps.
The Local Responsibility Area map will be updated this spring using similar data and
methodology. Both maps will impact local land use policies and wildfire management,
as certain areas have been recategorized into different severity levels.
Some topics currently planned to be covered include:
1. State Responsibility Area Map
2. Insurance Impacts
3. Future Planning
4. Local Fire Mitigation Efforts
10
During tonight's council meeting, the staff will provide a verbal update on the information
gathered at this meeting.
Los Angeles County Fire Department Annual Brush Clearance Inspections
In Fire Hazard Severity Zones and High Fire Hazard Severity Zones, the Los Angeles
County Fire Code mandates the clearance of hazardous vegetation around structures to
create "defensible space" for the effective protection of property, life, and the
environment from fire. These regulations are enforced jointly by the Los Angeles County
Fire Department (LACoFD) and the Department of Agricultural Commissioner/Weights
and Measures, Weed Hazard and Pest Abatement Bureau (Weed Abatement Division).
Annual abatement of hazardous vegetation is a critical component of the overall fire
prevention infrastructure throughout most of Los Angeles County. It is a resident’s legal
responsibility to take the necessary action by clearing vegetation around all structures at
risk.
At the beginning of the month, several Rancho Palos Verdes residents received
notification from Los Angeles County Fire Department on mandated brush clearance.
Staff is in process of gathering more information on the specifics of the Brush Clearance
Notice that will be provided to the public in the coming week. However, the following is a
brief summary of some of the facts.
Inspection Timeline
Brush clearance inspections are scheduled annually - June 1 in the Coastal Area, such
as Rancho Palos Verdes. If hazardous fire conditions exist on your property at the time
of inspection, you will be issued an Official Inspection Report which will indicate existing
violations and provide specific clearing instructions and a compliance deadline.
Homeowners have a minimum of 30 days to complete corrections. Failure to comply
with the Official Inspection Report will result in the imposition of a several administrative
fines, as well as possible abatement costs if the County completes the brush clearance.
Inspection Fee
The Los Angeles County Board of Supervisors has authorized an Inspection Fee of
$100 which will be assessed on all declared hazardous properties whether or not they
are cleared by the property owner. Los Angeles County Agricultural
Commissioner/Weights and Measures has been charging an inspection fee since 1989.
The inspection fee was $50 in 2022, $100 in 2023 and will be $151 in 2024.
The inspection fee will be assessed annually and show up on the November property
tax bill. There is a one-year delay from the inspection to seeing the assessment on your
property tax bill. (Example: if an inspection is conducted in June 2023, the property tax
assessment will arrive November 2024).
State Law Changes Impacting Requirements to Ensure Defensible Space
11
Due to the recent passage, new state laws governing defensible space, (AB 3074 and
AB 38), annual brush clearance compliance now necessitates more intensive fuel
reduction and the establishment of an ember-resistant zone within 5 feet of a structure.
Assembly Bill (AB) 3074
AB 3074, passed in 2020, requires a 5-foot ember resistant zone around all structures
in a fire hazard severity zone. Defensible space, coupled with home hardening, is
essential to improve your home’s chance of surviving a wildfire. Defensible space is the
buffer you create between a building on your property and the grass, trees, shrubs, or
any wildland area that surround it.
This space is needed to slow or stop the spread of wildfire and it helps protect your
home from catching fire — either from embers, direct flame contact or radiant heat.
Proper defensible space also provides firefighters a safe area to work in, to defend your
home.
Defensible Space Zones (Zones 1 and 2) currently make up the 100 feet of defensible
space required by law. For high hazard areas, this distance is 200 feet.
A new zone was introduced in AB 3074 in 2020. This new law requires a third zone
(Zone 0) to be defined and made part of the defensible space. Zone 0 extends 5 feet
from buildings, structures, decks, etc. This zone includes the area under and around all
attached decks and requires the most stringent wildfire fuel reduction. The ember-
12
resistant zone is designed to keep fire or embers from igniting materials that can spread
the fire to your home.
AB 3074 became law on January 1, 2021 but will not be enforced until the state
approves vegetation clearance requirements. For more information, visit:
• https://www.fire.ca.gov/dspace
• fire.lacounty.gov/fire-hazard-reduction-programs/
Assembly Bill (AB) 38)
California Assembly Bill No. 38 (AB38) seeks to mitigate the danger of wildfire by
outlining available retrofits designed to protect homes located in the Very High Fire
Hazard Severity Zone (VHFHSZ), and by directing vegetation management
requirements around these properties. AB 38 requires when a property is sold that is
located in a High or Very High Fire Hazard Severity Zone, which includes the almost the
entirety of the City of Rancho Palos Verdes, documentation is required showing the
property has passed a Defensible Space Inspection.
CONCLUSION:
Based on the information contained in this report, Staff offers the following
recommendations for the City Council’s consideration:
(1) Receive and file a report on resources available for wildfire residential property
insurance coverage for Rancho Palos Verdes residents.
(2) Direct Staff to pursue the City’s participation in the National Fire Protection
Association’s “Firewise USA” program and the Fire Risk Reduction Community
designation developed by the state’s Board of Forestry and Fire Protection.
(3) Coordinate with the City's Emergency Preparedness Committee in the drafting
and mailing of a residential fire insurance information and resources letter to all
households, including a survey of residents regarding the affordability and
availability of homeowner insurance for future City Council consideration.
ALTERNATIVES:
In addition to the Staff recommendations, the following alternative actions are available
for the City Council’s consideration:
1. Take no action at this time.
2. Identify additional projects or initiatives to be explored with the CDI
3. Take other action, as deemed appropriate.
13
• •
1 - • •
In re:
Department of Insurance
Regulatory Action:
Title 10, California Code of Regulations
~4dopt sections: 2644.9
Amend sections:
Repeal sections:
NOTICE OF APPROVAL OF REGULATORY
ACTION
Government Code Section 11349.3
OAL Matter Number: 2022-0901-05
OAL Matter Type: Regular (S)
In this regular rulemaking action, the Department of Insurance adopts requirements for
insurers to reflect and take into account specified mitigation factors in their rating plans
for the purposes of segmenting rates, creating a risk differential, or surcharging a
premium due to wildfire risk.
OAL approves this regulatory action pursuant to section 11349.3 of the Government
Code. This regulatory action becomes effective on 10!14/2022.
Date: October 14,.2022...._
Amy R. Gowan
Senior Attorney
For: Kenneth J. Pogue
director
Original: Ricardo Lara, Commissioner
Copy:. George Teekell
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DEPARTMENT OF INSURANCE
300 Capitol Mall,l7th Floor
Sacramento, CA 95814
FINAL TEXT OF REGULATION
MITIGATION IN RATING PLANS AND WILDFIRE RISK MODELS
September 1, 2022 REG-2020-00015
Title 10. Investment
Chapter 5. Insurance Commissioner
Subchapter 4.8. Review of Rates
Article 4. Determination of Reasonable Rates
Adopt: Section 2644.9. Consideration of Mitigation Factors; Wildfire Risk Models.
(a) Applicability.
(1) An insurer that applies or uses a rate that is developed with, determined by or
relies upon, in whole or in part, a rating plan that segments, creates a rate
differential, or surcharges the premium based upon a policyholder or applicant's
wildfire risk shall comply with this Section 2644.9. If a rate that is developed
with, determined by or relies upon a rating plan that complies with this section is
appra~ed, in whole-or in-part, and thereafter-such rating-plan is replaced, or
modified in any manner, including but not limited to, the inclusion of new factors,
or different criteria or algorithms, the insurer shall, prior to implementing the new
ar modified rating plan, file a new rate application, which shall include the new or
modified rating plan. No such new or modified rating plan shall be used unless
and until the new rate application is approved.
(2) A rating plan shall satisfy the requirements of subdivision (d)(1) of this
Section 2644.9 only if the rating plan taken as a whole, including the operation of
any Wildfire Risk Models that may be incorporated into the rating plan, takes into
account and reflects the factors described in subdivisions (d)(1)(A) and (d)(1)(B}
of this section. Nothing in this section shall be construed to require the use of a
Wildfire Risk Model.
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(b) Definitions.
As used in this section, each of the following terms has the meaning set forth below:
(1) Building Being Evaluated.
The term `Buildrng Being Evaluated" means the residential or commercial
structure in question, and includes decks that are attached to or abut the structure.
(2) Class-A Fire Rated Roof.
The term "Class-A Fire Rated Roof' has the same meaning as in the Chapter 7A
California Building Code (2019) as modified by the July 2021 supplement
thereto, codified at Section 705A.1 of Part 2 of Title 24.
(3) Enclosed Eaves.
"Enclosed Eaves" are roof eaves that have either (1) boxed-in roof eave soffits
with a horizontal underside or (2) an exterior covering applied to the underside of
the rafter tails supporting the eaves, which covering is sloped corresponding to the
slope of the rafter tails. Enclosed Eaves are thus distinguishable from open roof
eaves, whose rafter tails are exposed.
(4) Fire-Resistant Vents.
The term "Fire-Resistant Vents" has the same meaning as in the Chapter 7A
California Building Code (2019} as modified by the July 2021 supplement
thereto, codified at Sections 706A.1 and '706A.2 of Part 2 of Title 24.
(5) FirewiseUSA Site in Good Standing.
A "Firewise USA Site in Good Standing" is a community that, at the time the
Building Being Evaluated is rated, is recognized as such by the National Fire
Protection Association, a Massachusetts 501(c)(3) corporation.
(6) Wildfire Risk Model.
(A) The term "Wildfire Risk Model" means any tool, instrumentality, means
or product, including but not limited to a map-based tool, a computer-
based tool or a simulation, that is used by an insurer, in whole or in part, to
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measure or assess the wildfire risk associated with a residential or
commercial structure for purposes of:
1. Classifying individual structures according to their wildfire risk; or
2. Estimating losses corresponding to such wildfire risk
classifications.
(B) The term "Wildfire Risk Model" does not include models used for
purposes of projecting aggregate losses under Section 2644.4 or 2644.5.
(c) Wildfire Risk Models to be provided to the Commissioner.
Pursuant to Insurance Code section 1861.05, subdivision (b), any Wildfire Risk Model, as
defined in subdivision (b)(6) of this section, that is used, in whole or in part, in an
insurer's rating plan shall be provided to the Commissioner as part of an insurer's
complete rate application.
(d) Mandatory factors.
(1) No insurer shall use a rating plan that does not take into account and reflect the
following mandatory factors:
(A) Community-level mitigation designations: The rating plan sha11 reflect,
and the rate offered to the applicant or insured shall be based in part on,
the reduced wildfire risk associated with each and every community-level
mitigationdesignationlistedbelowinthiss~bdivision(d)(1)(A)thatis
applicable to the community in which the Building Being Evaluated is
located. Community-level mitigation designations include:
1. Fire Risk Reduction Community listed by the Board of Forestry
pursuant to Public Resources Cade section 4290.1; and
2. Firewise USA Site in Good Standing.
(B) Property-level mitigation efforts.
The rating plan shall reflect, and the rate offered to the applicant or
insured sha11 be based in part on, the reduced wildfire risk resulting from
each and every property-level wildfire risk mitigation effort listed in
subdivisions (d)(1)(B)l.a. through (d)(1)(B)l.e. and (d)(1)(B)2.a. through
(d)(1)(B)2.e., below, that is undertaken with respect to an individual
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property being assessed for risk. Individual property-level wildfire risk
mitigation efforts include:
1. Measures addressing the immediate surroundings of the Building
Being Evaluated, including:
a. Clearing of vegetation and debris from under decks,
b. Clearing of vegetation, debris, mulch, stored combustible
materials, and any and all movable combustible objects,
from the area within five (5) feet of the Building Being
Evaluated,
c. Incorporation of only noncombustible materials into that
portion of any improvements to the property on which the
Building Being Evaluated is located, including fences and
gates, which is situated within five (5) feet of the Building
Being Evaluated,
d. Removal or absence of combustible structures, including
sheds and other outbuildings, from the area within
thirty (30) feet of the Building Being Evaluated or, in the
event that the applicant or insured does not control the
entirety of the area extending thirty feet from the Building
Being Evaluated, removal of combustible structures from
as much of such. area as is under the control of the. applicant.....
or policyholder, and
e. Whether the property upon which the Building Being
Evaluated is situated complies with Section 4291 of the
Public Resources Code, and any applicable local
ordinances, governing defensible space; and
2. Building hardening measures, including provision of the following:
a. Class-A Fire Rated Roof,
b. Enclosed Eaves,
c. Fire-Resistant Vents,
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d. Multipane windows, including dual pane windows, or
functional shutters, which when closed, cover the entire
window and do not have openings, and
e. At least six (6) inches of noncombustible vertical clearance
at the bottom of the exterior surface of the building,
measured from the ground up.
(2) No later than one hundred eighty (180) days following the date this section is filed
with the Secretary of State, each insurer shall file a rate application that
incorporates a rating plan that includes the factors described in subdivision (d)(1)
of this section.
(e) Optional factors.
An insurer may use a rating plan which incorporates other factors that the insurer
demonstrates are substantially related to risk of wildfire loss, and do not result in rates
that are excessive, inadequate or unfairly discriminatory. These optional factors may
include, but are not limited to:
(1) Fuel: This factor shall take into account the various types of combustible
materials, and the density of those materials, in the vicinity of the Building Being
Evaluated,- including the location of trees, grass, brush, and other vegetation
relative to the structure. The fuel factor shall take into account the fact that
different fuels burn at different rates and intensities, resulting in different levels of
wildfire risk. If used, this factor shall reflect the historic and estimated impact on
losses related to fuel, as described in this subdivision (e)(1).
(2) Slope: This factor shall take into account the position of the Building Being
Evaluated on a slope relative to potential sources of ignition, and the steepness of
the slope between those potential sources of ignition and the structure. If used,
this factor shall reflect the historic and estimated impact on losses related to slope,
as described in this subdivision (e)(2).
(3) Access: Access reflects the ease or difficulty with which firefighting personnel
and equipment can reach structures at risk of wildfire. The access factor shall
include consideration of the presence of dead-end roads, road width, shoulders,
and availability of multiple access points with respect to the Building Being
Evaluated. If used, this factor sha11 reflect the historic and estimated impact on
losses related to access, as described in this subdivision (e)(3).
(4) Aspect: The aspect factor shall reflect the direction the slope upon which the
Building Being Evaluated is located faces. If used, this factor shall reflect the
historic and estimated impact on losses related to aspect, as described in this
subdivision (e)(4).
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(5) Structural characteristics: The structural characteristics factor shall reflect the
materials used in the construction, and may reflect such items as the design, of the
Building Being Evaluated. The structural characteristics factor shall not reflect the
construction materials or any other item the insurer is required to take into
account pursuant to subdivision (d) of this section. If used, the structural
characteristics factor shall reflect the historic and estimated impact on losses
related to structural characteristics, as described in this subdivision (e)(5).
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(6) Wind: The wind factor shall take into account the degree to which wind speed and
direction in the vicinity of the Building Being Evaluated may impact a wildfire's
progression. If used, the wind factor shall reflect the historic and estimated impact
on losses related to wind, as described in this subdivision (e)(6).
(7) Other community-level or property-level mitigation efforts, or designations, not
specified in subdivision (d) of this section as recommended by a state or localfire
safety agency or organization as reducing wildfire risk.
Availability for public inspection.
Any rating plan, or Wildfire Risk Model submitted to the Commissioner in connection
with a complete rate application pursuant to subdivision (c) of this section, or any
additional documentation relating to such rating plan or model as may be requested by
the Commissioner during the review of any such application, including any records, data,
algorithms, computer programs, or any other information used in connection with the
rating plan or_Wildfire Risk Model used by the insurer which is provided to the
Commissioner, shall be available for public inspection pursuant to Insurance Code
sections 1861.05, subdivision (b), and 1861.07, regardless of the source of such
information, or whether the insurer or the developer of'the rating plan or Wildfire Risk
Model claims the rating plan or Wildfire Risk Model is confidential, proprietary, or trade
secret. Pursuant to Insurance Code section 1855.5, subdivision (a), a Wildfire Risk Model
as defined in subdivision (b)(6) of this section that is made available by an advisory
organization to its members for use in California shall be filed with the Commissioner
and made available for public inspection.
Credible data.
Any rate application shall incorporate the insurer's own California wildfire loss data to
the extent that it is credible to support each segment, rating differential, or surcharge
being requested. To the extent the insurer's own California data is not fully credible, the
insurer shall credibility-weight its data with an appropriate complement of credibility to
support each segment, rating differential, or premium surcharge. If the Commissioner
aggregates California premium-and-loss data by wildfire risk to create a fire and wildfire
exposure risk manual pursuant to Insurance Code section. 929.2, an insurer may rely on
the then-current version of the manual as support for each segment, rating differential, or
surcharge being requested in connection with a residential property rate application,
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either directly or as a complement of credibility to the insurer's own California wildfire
loss data.
(h) Provision of wildfire risk score or other wildfire risk classification to policyholder or
applicant.
An insurer utilizing a Wildfire Risk Model, or rating factor, to segment, create a rate
differential, or surcharge the premium based upon the policyholder or applicant's wildfire
risk shall, within one hundred eighty (180). days after the date this section is filed with the
Secretary of State, implement a written procedure to provide, in writing, to each such
policyholder or applicant for property insurance the wildfire risk score or other wildfire
risk classification used by the insurer to segment, create a rate differential, or surcharge
the premium based upon the policyholder or applicant's wildfire risk. The insurer shall
provide to the policyholder or applicant such wildfire risk score or classification at the
following times:
(1) No later than fifteen (15) days following the submission to the insurer of the
applicant's completed application;
(2) At least forty-five (45) days prior to each renewal;
(3) At least seventy-five (75) days prior to any nonrenewal; and
(4) In the event that the policyholder or applicant has completed a mitigation measure
on the subject property since the time of the last application to or renewal by the
insurer, no later than thirty (30) days following the submission to the insurer of
the policyholder or applicant's request that the insurer provide a revised wildfire
risk score or wildfire risk classification.
(i) Policyholder or applicant's right to appeal.
The procedure described in subdivision (h) of this section shall permit a policyholder
under, or applicant for, a policy of property insurance who disagrees with the assignment
of the wildfire risk score, or other wildfire risk classification, provided to the
policyholder or applicant pursuant to that subdivision the right to appeal orally or in
writing that assignment directly to the insurer. The insurer shall notify the policyholder or
applicant in writing of this right to appeal the wildfire risk score or other wildfire risk
classification whenever such score or classification is provided to the policyholder. ar
applicant as set forth in subdivision (h) of this section. If the policyholder or applicant
appeals the wildfire risk score or other wildfire risk classification, the insurer shall
acknowledge receipt of the appeal in writing within ten (10) calendar days of receipt of
the appeal. The insurer shall respond to the appeal in writing with a reconsideration and
decision within thirty (30} calendar days after receiving the appeal, In the event that an
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appeal is denied, the insurer shall, upon request by the Department, forward a copy of the
appeal, and the insurer's response, to the Department.
(j) Representation by broker or agent.
If the policyholder or applicant is represented by a broker, or the insurer is represented by
an insurance agent with respect to the policyholder's policy or the applicant's application,
the policyholder or applicant may appeal orally or in writing to the agent or broker the
assignment of wildfire risk score or other wildf re risk classification, who shall then
forward that appeal to the insurer no later than five (5) calendar days after receiving the
appeal from the policyholder or applicant. The insurer shall acknowledge receipt of the
appeal in writing to the policyholder or applicant and the agent or broker no later than
five (5) calendar days after receipt of the appeal from the broker or agent. The insurer
shall respond to the appeal to the policyholder or applicant and the agent or broker with a
written reconsideration and decision of the appeal within thirty (30) calendar days after
receiving the appeal from the broker or agent. In the event that an appeal is denied, the
insurer shall, upon request by the Department, forward a copy of the appeal, and the
insurer's response, to the Department.
(k) Explanation of wildfire risk score or other wildfire risk classification.
Whenever a wildfire risk score, or otiher wildfire risk classification used by the insurer to
segment, create a risk differential or surcharge the premium for a particular policyholder
or applicant, is identified or provided to the policyholder ar applicant pursuant to
subdivision {h) of this section, the insurer shall also provide in writing:
(1) The range of such scores or classifications that could possibly be assigned to any
policyholder or applicant;
(2) The relative position of the score or classification assigned to the policyholder or
applicant in question within that range of possible scores or classifications, and
the impact of the score or classification on the rate or premium; and
(3) A detailed written explanation of why the policyholder or applicant received the
assigned score or classification; the explanation shall make specific reference to
the features of the property in question that influenced the assignment of the score
or classification.
The insurer shall provide, in addition, the following information:
(A) Which mitigation measure or measures can be taken by the policyholder
or applicant to lower the wildfire risk score or classification; and
(B) The amount of premium reduction the policyholder or applicant would
realize as a result of performing each such measure under the insurer's
rating plan that is in effect at the time.
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(~ Notification to policyholder or applicant of right to contact Department in connection
with insurer's response to appeal.
When an insurer responds to the applicant or policyholder in connection with an appeal
pursuant to subdivision (i) or (j) of this section, it shall also notify the policyholder or
applicant in writing that the policyholder or applicant may contact the Department of
Insurance for assistance if the policyholder or applicant disagrees with the insurer's
written reconsideration and decision. In any event, the insurer shall provide the
policyholder or applicant with the Department of Insurance toll-free consumer hotline
and web address of the Department's Consumer Complaint Center.
(m) No curtailment of applicant or policyholder's rights.
Nothing in this section shall be construed to limit the right of an applicant or policyholder
to complain directly to the Commissioner at any time or to pursue any other remedy or
other action allowed under California or federal law.
(n) Inapplicability to certain commercial policies.
This section shall not apply to a commercial policy insuring multiple locations, none of
whose wildfire risk is considered in rating the policy.
No`rE: Authority cited: Sections 1858, 1859, 1861.01, 1861.05 and 1861.07, Insurance Code;
20th Centu~~y v. GaNamenc~i, 8 Cal.A~th 216 (1994). Reference: Sections 1851, 1855.5, 1858,
1861.05, 1861.Q7 and 1861.13, Insurance Code.
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FOR IMMEDIATE RELEASE:
Monday, October 17, 2022
MEDIA INQUIRIES ONLY:
916-492-3566
main
Michael Soller: 916-661-0556 cell
Gabriel Sanchez: 213-418-5338 cell
Email inquiries: cdipress@insurance.ca.gov
Commissioner Lara enforces nation’s first wildfire safety regulation to
help drive down cost of insurance
Directs insurance companies to provide discounts to consumers under new Safer from
Wildfires framework with transparency about risk rating
SACRAMENTO, Calif. — Insurance Commissioner Ricardo Lara will enforce the new insurance
pricing regulation he wrote recognizing and rewarding wildfire safety and mitigation efforts made by
homeowners and businesses. Commissioner Lara’s regulation is the first in the nation requiring
insurance companies to provide discounts to consumers under the Safer from Wildfires framework
created by the California Department of Insurance in partnership with state emergency preparedness
agencies. The regulation is now state law and enshrined in the California Code of Regulations.
“Protecting Californians from deadly wildfires means everyone doing their part, including insurance
companies by rewarding consumers for being safer from wildfires,” said Commissioner Lara. “The
reality of climate change is driving my determination to help communities better prepare, help our
firefighters save lives, and help more Californians find insurance they can afford. My Department will
work diligently to increase discounts to reward the hard work that California consumers do to protect
their families, homes, businesses, and communities.”
Commissioner Lara’s regulation requires insurance companies to submit new rate filings
incorporating wildfire safety standards created by the Department, and to establish a process for
releasing wildfire risk determinations to residents and businesses within 180 days. Transparency is
an important benefit of this regulation, by requiring insurance companies to provide consumers with
their property’s “wildfire risk score” and creating a right to appeal that score.
This regulation is part of a comprehensive solution that Commissioner Lara initiated after taking
office to protect consumers from climate change-intensified wildfires. When Commissioner Lara took
office in 2019, insurance companies representing 7 percent of the residential market provided
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insurance discounts and, under his leadership, that figure has grown to 40 percent. When this
regulation is fully implemented, it will be 100 percent of the residential and commercial market
aligned with the Safer from Wildfires framework.
Commissioner Lara directed the Department to write the regulation to protect consumers and
improve market competition after hearing first-hand from consumers and business owners about their
frustration with insurance companies that did not consider mitigation in their rating plans. During town
hall meetings in more than 38 counties and an extensive Department investigatory wildfire hearing in
2020, many consumers testified that their homes and businesses were subject to “wildfire risk
scores” that many did not know existed and had no right to appeal if inaccurate.
Regulation followed extensive public input and Safer from Wildfires partnership with
Governor Gavin Newsom’s Administration
Commissioner Lara took what he learned from Californians to shape this rule that will promote a fair,
transparent, and competitive insurance market. In October 2021, Commissioner Lara shared an
initial version of the text of regulation. Following further public input, Commissioner Lara formally
proposed his regulations in February of 2022 and held a public hearing to receive verbal and written
comments before submitting the final regulation on September 1, 2022 for approval by the California
Office of Administrative Law, of which that approval has now been received.
The regulation incorporates the Safer from Wildfires framework, created in February 2022 by a first-
ever partnership between the Department of Insurance and the emergency preparedness agencies
in Governor Newsom’s Administration, including the California Department of Forestry and Fire
Protection (CAL FIRE), the Governor’s Office of Emergency Services (CalOES), the Governor’s
Office of Planning and Research, and the California Public Utilities Commission.
“Home Hardening retrofits, along with Defensible Space significantly increase a home’s chance of
surviving a wildfire,” said Chief Daniel Berlant, CAL FIRE Deputy Director of Community Wildfire
Preparedness & Mitigation. “Using the latest fire science and recent wildfire data, these retrofits
and landscaping requirements provide a strong path to structure survivability. CAL FIRE is currently
funding over three hundred million dollars in local wildfire prevention projects to prepare communities
against wildfire, but we know it will take every resident doing their part to ensure California is fully
protected.”
Regulations will drive down costs and create transparency for consumers
The regulation requires insurance companies to submit new rates that recognize the benefit of safety
measures such as upgraded roofs and windows, defensible space, and community-wide programs
such as Firewise USA and the Fire Risk Reduction Community designation developed by the state’s
Board of Forestry and Fire Protection, which currently includes the counties of Los Angeles, Santa
Barbara, and Butte as well as cities and local districts.
“I applaud and welcome the new insurance pricing regulation developed by Commissioner Lara,”
said Los Angeles County Supervisor Kathryn Barger, who represents approximately 2 million
residents, including many who own properties in the county’s wildland urban interface. “Over the
years, I’ve met with many wildfire survivors who were underinsured and, as a result, were financially
ruined – left with a home that’s uninhabitable, that they can’t afford to repair, yet still liable for
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meeting their mortgage payments. The discounts offered to property owners who harden their homes
and take action to mitigate wildfire threats are a financial reward that I believe will be embraced by
many. This is a big step forward towards promoting community-driven preparedness and
resilience.”
“Commissioner Lara’s proposed regulation will transform the insurance landscape by rewarding
wildfire risk reduction, creating safer communities and restoring access to affordable coverage,” said
Amy Bach, Executive Director of United Policyholders, a 31-year-old non-profit assisting
California insurance consumers whose statewide Wildfire Risk Reduction and Asset Protection
(WRAP) working group is working toward the goal of this regulation. “Giving people a financial
incentive to do their part is a critical and fair step to getting ‘all hands on deck’ to save homes and
lives. United Policyholders strongly supports this common-sense and sustainable solution to the
property insurance problems millions of Californians are experiencing.”
“Communities have been engaging in wildfire risk reduction through the national Firewise USA
program for two decades,” said Michele Steinberg, wildfire division director for the National Fire
Protection Association (NFPA). “The Firewise USA process requires annual preparedness work
across neighborhoods, and a long-term commitment. This ongoing effort has proven to reduce
property losses from wildfire and should factor into risk evaluations and insurance rates.”
“My regulation is the result of listening closely to the needs of consumers and businesses and
crafting common-sense, lasting solutions that strengthen our ability to protect Californians from the
threat of climate change-intensified wildfires,” said Commissioner Lara.
The Safer from Wildfires regulation is part of a larger solution that Commissioner Lara is pursuing for
consumers and wildfire survivors that includes working to increase insurance protections and market
competition to help protect consumers. Commissioner Lara’s actions since taking office in 2019
include, among others:
Protecting more than 4 million homeowners from non-renewal or cancellation of insurance
following declared wildfire emergencies, in order to speed up community recovery.
Sponsoring new insurance protections signed into law by Governor Newsom — despite
opposition from insurance companies — that will mean larger payouts for some consumer claims,
less red tape from insurance companies, and more help for people under evacuation orders.
Ordering the FAIR Plan, the state’s insurer of last resort, to offer a more comprehensive
homeowners policy as an option, which a judge upheld, as well as expanding residential and
commercial coverage limits for the first time in 25 years to keep pace with increased costs.
Support for wildfire safety regulation: What Californians are saying
Those supporting the regulation’s adoption include many on the front lines of wildfire safety such as
fire leaders, local communities, homeowners groups, and agricultural businesses:
“We know firsthand that actions by property owners and communities can significantly reduce risks to
lives and homes. The regulation proposed by the California Department of
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Insurance to require insurers to take projects such as vegetation management into account in setting
premiums, to provide certain mitigation and wildfire risk information and to provide a process by
which applicants and policyholders may appeal a wildfire risk score or classification assigned by the
insurer will in turn incentivize property owners to further harden their homes, properties, and
communities. We appreciate that the regulation will create more accurate risk assessments of
properties and communities and better communication between insurers and residents.”
—Mariposa County Supervisor Rosemarie Smallcombe, who represents areas around Yosemite
National Park damaged by the recent Oak Fire
“California Professional Firefighters commends Commissioner Lara and the Department of Insurance
for their ongoing work to respond to our State’s wildfire challenges. The Commissioner’s work to
promote and strengthen home and community hardening, while improving access to homeowners’
insurance, are a critical part of the State’s response to these challenges.”
—Brian K. Rice, President of the California Professional Firefighters
“Representing more than one-third of all housing units in California, Homeowners Associations
across the state are taking wildfire mitigation actions at the community-wide level that will make
residents safer. We support the regulation proposed by Commissioner Lara requiring insurance
companies reward communities for their actions, helping save lives and protect access to affordable
insurance.”
—Jeffrey Beaumont, Chair of the Community Associations Institute, California Legislative
Action Committee
“As climate change increases the severity of California’s fire seasons, California Farm Bureau
members simply cannot conduct the business of farming without access to affordable,
nondiscriminatory policies. This regulation could help reduce wildfire risk, by incentivizing individual
and community mitigation measures that provide a return on those investments by policyholders,
hopefully, through increased market competition, consumer choice, and access to comprehensive,
affordable insurance across all of California.”
—Jamie Johansson, President, California Farm Bureau
“Coalition for Clean Air agrees with Commissioner Lara that insurers should recognize consumers’
wildfire mitigation actions in their rate filings. Rates should provide incentives to harden homes and
communities. Those actions will help save lives and homes, and will also reduce toxic smoke that is
emitted when buildings burn.”
—Bill Magavern, Policy Director, Coalition for Clean Air
“Realtors have been advocating for transparency with regard to fire risk scores for quite a while and
we are pleased at Commissioner Lara’s efforts. The proposed regulations would compel insurance
companies to consider a homeowner’s fire mitigation efforts in setting their rates. Homeowners
deserve to be rewarded for their efforts.”
—Anna Buck, Legislative Advocate for the California Association of REALTORS
“The Rancho Murieta Regional Fire Safe Council has for years pursued wildfire risk reduction
through home hardening and fire fuels reduction measures that have contributed to ongoing overall
wildfire safety in the community. Requiring financial acknowledgement by the insurance industry in
their rating plans for homeowners and businesses which meet the criteria of ‘Safer from Wildfires’ will
continue to provide a more favorable private insurability status by increasing the safety of
communities.”
—Greg Pryor, a retired firefighter and resident of Rancho Murieta in Sacramento County
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“The need to get outdoors is greater than ever, and we have more Californians who want to go
camping than we have camping accommodations. Yet one of the greatest barriers for campgrounds
and RV parks is the ability to obtain insurance with appropriate coverage at reasonable rates.
Providing rebates or rate decreases for fire abatement strategies will allow these small businesses to
stay protected and in turn allow them to serve more California consumers.”
—Dyana Kelley, President of the California Outdoor Hospitality Association, which represents
RV parks and campgrounds across the state
“Despite a long history of proactive fuel reduction work, many owners in my community have found
themselves priced out of fire insurance, or with their policies cancelled outright. I believe that
communities and property owners who take proactive steps should have that work reflected in their
insurance rates and strongly support the regulation.”
—Katie Weber, a property owner in Yosemite West who worked with her neighbors to be certified
as a Firewise USA community, which is recognized in the proposed regulation
“When my husband and I renewed our homeowners policy last year, we were astounded to see the
cost had doubled with no recognition of the wildfire safety actions we have taken including working
with our neighbors to become a Firewise USA community. This proposed regulation is clear on steps
homeowners can take to reduce their fire risk. I wholeheartedly support the mandate that insurers
take into consideration fire mitigation steps homeowners have taken when determining the risk of the
dwelling and what cost should be assigned.”
—Susan Frommer, a resident of Murrieta in Riverside County
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. Under 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, perform market conduct reviews of insurance companies, resolve consumer
complaints, and investigate and prosecute insurance fraud.
Consumers are urged to call 1‐800‐927‐4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non‐media
inquiries should be directed to the Consumer Hotline at 800‐927‐4357. Teletypewriter (TTY), please dial 800‐482‐4833.
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
FACT SHEET: Insurance Policy Count Data 2015-2021
1
Overview
This Fact Sheet includes statewide information describing the trends from 2015-2021 data of
new, renewed, and non-renewed homeowners and dwelling fire policies issued by insurance
companies, as well as 2015-2021 FAIR Plan policy counts, with comparisons to data from multiple
years. The California Department of Insurance (Department) annually collects data on the
number of new, renewed, and non-renewed policies1 issued by insurance companies writing
$5 million or more in written premium in homeowners and dwelling fire insurance lines,
representing approximately 98% of the homeowners’ insurance market. The Department also
continues to monitor annual counts of non-renewals and annual number of California FAIR
Plan policies to better understand insurance availability in the residential marketplace.
This Fact Sheet is one part of the Department’s effort to provide the public with important
insurance market information. The Department has collected statewide non-renewal
information for the years 2015-2021. By collecting multiple years of data, the California
Department of Insurance can monitor multi-year trends for insurance non-renewals and FAIR
Plan policy numbers. The Appendices in this Fact Sheet also include visual aids and tables of
information related to specific groups of counties. Fact Sheets from previous years and county-
level nonrenewal information can be found at the Department’s webpage on Data and Analysis
on Wildfire and Insurance, along with additional wildfire related datasets.
Statewide Results and Observations
1.Annual nonrenewal data for residential policies show an overall upward trend
from 2015-2021, with some fluctuations for insurer-initiated non-renewals year to
year
Data from 2021 show an elevated total number of non-renewed policies in the admitted
insurance market when compared to the years prior to 2019 (Figure 1). Insurance company-
initiated non-renewals (hereinafter “insurer-initiated”) increased in 2021 after previous-year
declining in 2020, while consumer-initiated non-renewals show an upward trend over multiple
years since 20152.
1 Reported non-renewed numbers combine both policies cancelled mid-term before the end of the policy period and
policies that were not renewed at the policies’ expiration date.
2 See Table 1 for explanation of differences between insurer-initiated and consumer-initiated non-renewal counts.
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
2
Figure 1. Count of Non-Renewals and Cancellations for homeowners and dwelling fire
policies 3
Observations:
•The number of insurer-initiated and consumer-initiated homeowners and dwelling fire
non-renewals have trended higher over the timeline of the data collections, as shown by
the dotted line-of-best-fit 4.
•Over the same time period, the number of total homeowners and dwelling fire policies in
California (new policies plus renewed policies) has grown. When more policies are in
effect, there are more overall policies to potentially be nonrenewed in a given year.
Therefore, the percentage of annual non-renewals is also important to consider.
•Approximately 13% of the total voluntary market homeowners and dwelling fire policies
(new plus renewed) were non-renewed in 2021, compared to 11% in 2018 based on the
number of policies reported in each year.5
3 After reviewing previous data submitted by insurers in past years, the Department determined that clarifications were
needed to improve consistency of how non-renewals were classified and reported by insurance companies. Starting in
2020, CDI clarified to insurers as to how to report cancellations and non-renewals when nonpayment of premium occurred.
The Department directed companies to categorize nonpayment of premium as a consumer-initiated action, rather than
insurer-initiated as some companies had done previously prior to 2020. We have calculated the net effect to be
approximately 10,000 insurer-initiated non-renewed policies to be recategorized as consumer-initiated in 2020.
4 The dotted line in Figure 1 and Figure 2 is calculated as a “line of best fit” to illustrate the trend over multiple years.
5 These numbers are derived using a simplified formula for ease of review of this document that yields almost identical
results; a more precise measurement requires calculating the percentage of non-renewals based on the total number of
new and renewed policies from the prior year since it is usually prior year policies which are cancelled or non-renewed in
the following year.
182,059 178,315 166,285 165,008 234,843 186,440 241,662
717,522 738,436 751,807 749,179 787,795 805,787 876,760
150,000
350,000
550,000
750,000
950,000
2015 2016 2017 2018 2019 2020 2021Policy CountYear
Non-Renewals and Cancellations
Insurer-Initiated Consumer-Initiated
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
3
2.Total FAIR Plan policies in 2021 remain elevated while new policies declined
relative to 2020
From 2019-2021, the number of new FAIR Plan policies remains at an elevated level
compared to the prior 2015-2018 period although, in 2021, there were about 10,000 fewer new
FAIR Plan policies written than in the prior year (Figure 2). More policyholders renewed FAIR
Plan policies starting in 2020 compared to the previous year, but the rate of growth slowed
almost two-fold. As of the end of 2021, FAIR Plan policies made up approximately 3% of the
overall residential insurance policies in California. The four appendices at the end of this Fact
Sheet provide further breakdowns of the data, including for areas that have geographic
indications of wildfire risk.
Figure 2. Count of New and Renewed FAIR Plan Policies
Figure 3. FAIR Plan Policies (New + Renewed) as a Percentage of the Total Number of Policies in the
Overall Market
22,740 22,643 22,017 23,049
73,557 75,477 66,652
141,391 141,192 140,312 140,447
189,790
238,529 268,231
-
100,000
200,000
300,000
2015 2016 2017 2018 2019 2020 2021Policies
Year
FAIR Plan Policies
New Policies Total Policies (New + Renewed)
1.7%1.6%1.6%1.6%2.1%2.7%3.0%
0.0%
1.0%
2.0%
3.0%
4.0%
2015 2016 2017 2018 2019 2020 2021Percent
Year
Percent of FAIR Plan Policies to Total Market
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
4
Observations:
•The number of new FAIR Plan policies declined in 2021 compared to 2019 and 2020,
which is consistent with public statements made by the FAIR Plan that new policies
would taper off in 2021 (“California’s wildfire insurance crisis is easing. Why some
carriers are returning,” Sacramento Bee, November 13, 2021). However, the number of
new policies written in 2021 remains elevated when compared to historical trends from
2018 and earlier.
•As of the end of December 2021, FAIR Plan policies made up 3% of the total number of
policies (including surplus lines) of the overall residential insurance policies in California,
a percentage that has been increasing incrementally, by about a half a percentage point
a year, since 2018, when FAIR Plan policies were 1.6 percent of the overall market.
3.Encouraging trends in areas most at risk of wildfires
Based on the multi-year trends shown in this Fact Sheet, there are some encouraging trends
for homeowners and dwelling fire insurance availability, including:
1.Starting in 2020, the counties categorized as most at risk from wildfires had an increase
in the number of residential policies being renewed, and a decrease in the number of
policies being non-renewed as compared to the prior year. This may suggest that
consumers (policyholders) in these areas may have had more opportunities to renew
with their current carrier instead of moving to a different carrier.
2.The number of new FAIR Plan policies went down in 2021 compared to 2020, showing
a more gradual increase than in the previous two years.
Insurance Commissioner Ricardo Lara continues to act to promote increased options for
consumers. Recent regulations, legislation, and data analysis supported by the Department
encourages wildfire risk mitigation for homes and communities. By the end of 2021, insurance
companies representing 40 percent of the market offered wildfire safety discounts.
Commissioner Lara enforced a new regulation expanding insurance discounts under the Safer
from Wildfires framework in October 2022 to the entire homeowners and commercial insurance
marketplace. The full impact of these actions will be seen in future data.
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5
CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
Explanation of Non-Renewal Categories
Consistent with the Department’s Fact Sheets on nonrenewal data from 2019-2020, the 2021 non-
renewal numbers for homeowners and dwelling fire policies are broken-down between insurer- vs.
consumer-initiated non-renewals.6
Non-renewals can happen for a number of reasons, and are a separate category from cancellations,
which are less common. Table 1 provides examples of how non-renewals are classified between these
two categories; although this list is illustrative, it is not an exhaustive list of every reason.
Table 1: Examples of Insurer-Initiated and Consumer-Initiated Non-Renewals and Cancellations
Insurer-Initiated Consumer-Initiated
Cancellation Non-Renewal Cancellation Non-Renewal
•Cancellation during
first 60 days due to
underwriting
ineligibility.
•Fraudulent or missing
info in applications.
•Cancellation of legal
protection insurance
(LPI) policies upon
mortgage-holder
either securing
insurance through a
standard carrier or no
longer having an
insurable interest.
•Changes that affect
underwriting criteria,
such as changes to
condition of the
dwelling or brush fire
score.
•Claim history or
exposure to liability
loss.
•Insurer exiting the
market.
•Insurer restricts
underwriting eligibility
for renewal business.
No reason required to
be provided to insurer,
but may include:
•Consumer cannot
afford premium
payments.
•Consumer no longer
has an insurable
interest in the
property.
•Consumer finds a
more favorable policy
with a competitor.
No reason required to
be provided to insurer,
but may include:
•Consumer no longer
has an insurable
interest in the
property.
•Consumer finds a
more favorable policy
with a competitor.
•Consumer cannot
afford premium
payments.
6 For clarity, the Fact Sheet starting this year and going forward will use the term “consumer-initiated non-renewals”
instead of the previously used one “insured-initiated non-renewals”.
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
Appendices
Appendix A: Number of New, Renewed, and Non-Renewed Homeowners’ Policies in the State
1 The number of new, renewed, and non-renewed policies reported includes homeowners (HO-2, HO-3, HO-5, and HO-8, or
equivalent), dwelling fire forms (excluding dwelling fire contents only coverage), landlord business owner policies (residential
policies of 4 units or less), and mobile homes, representing 98 % of the homeowners market. It excludes renters (HO-4) and
condominium (HO-6) data. In some instances, Difference in Condition (DIC) policies were included in the number of new,
renewed, and non-renewed counts.
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
Appendix B: Number of New, Renewed, and Non-Renewed Homeowners’ Policies in ZIP Codes
that overlap with the State Responsibility Areas (SRA²)
1 The number of new, renewed, and non-renewed policies reported includes homeowners (HO-2, HO-3, HO-5, and HO-8, or
equivalent), dwelling fire forms (excluding dwelling fire contents only coverage), landlord business owner policies (residential
policies of 4 units or less), and mobile homes, representing 98 % of the homeowners market. It excludes renters (HO-4) and
condominium (HO-6) data. In some instances, Difference in Condition (DIC) policies were included in the number of new,
renewed, and non-renewed counts.
2 State Responsibility Area (SRA): CAL FIRE created a fire map depicting moderate to very high fire hazard severity zones in
California that was adopted on November 7, 2007. We were able to conjoin the fire zones with ZIP codes to identify the ZIP
codes affected. However, we have no means to determine to which extent.
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
8
Appendix C: Number of New, Renewed, and Non-Renewed Homeowners’ Policies in 10
Counties² with the Highest Exposure to Wildfire3
1 The number of new, renewed, and non-renewed policies reported includes homeowners (HO-2, HO-3, HO-5, and HO-8, or
equivalent), dwelling fire forms (excluding dwelling fire contents only coverage), landlord business owner policies (residential
policies of 4 units or less), and mobile homes, representing 98 % of the homeowners market. It excludes renters (HO-4) and
condominium (HO-6) data. In some instances, Difference in Condition (DIC) policies were included in the number of new,
renewed, and non-renewed counts.
2 The ten counties ranked by highest exposure first are as follows: Tuolumne, Trinity, Nevada, Mariposa, Plumas, Alpine,
Calaveras, Sierra, Amador, and El Dorado.
3 See Appendix C in Cignarale, T., Laucher, J., Allen, K., & Landsman-Smith, L. (2017). The Availability and Affordability of
Coverage for Wildfire Loss in Residential Property Insurance in the Wildland-Urban Interface and Other High-Risk Areas of
California: CDI Summary and Proposed Solutions. California Department of Insurance’s Availability and Affordability Residential
Property Insurance Task Force.
Observations:
1. The counties included in Appendix C consistently represent only 2% of the total new and
renewed homeowners and dwelling fire policies in the state’s voluntary market from
2015 through 2021. However, FAIR Plan policies in these counties have steadily
increased, with FAIR Plan policies making up approximately 22% of total new and
renewed residential policies covering fire perils written in these counties in 2021, up from
only 1% back in 2015.
0.6%0.8%1.2%2.2%
12.3%18.6%21.9%
0.0%
10.0%
20.0%
30.0%
2015 2016 2017 2018 2019 2020 2021Percent
Year
FAIR Plan as a Percentage of Total Policies in the 10 Counties with the
Highest Exposure to Fire Risk
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
9
2.As noted earlier, starting from 2020, there are fewer non-renewals and more renewals
year-over-year. This comes after 2019 had large increases in non-renewals and
decreases in renewals compared to 2018.
3.The FAIR Plan trends in 2021 for these 10 counties show a decrease in new policies
written compared with 2020, while renewed policies increased. This suggests that while
fewer people are seeking FAIR Plan coverage, many people with a FAIR Plan policy are
staying with the FAIR Plan.
4.Surplus lines for homeowners and dwelling fire policies are becoming less prevalent in
these counties, with a 43% year-over-year decline in new and renewed policies in 2021
compared to 2020.
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CALIFORNIA DEPARTMENT OF INSURANCE
2021 Data on Insurance Non-Renewals and FAIR Plan
10
Appendix D: Number of New, Renewed, and Non-Renewed Homeowners’ Policies in Counties²
Where 25% or More of the Homes are in High Wildfire Risk Areas3
1 The number of new, renewed, and non-renewed policies reported includes homeowners (HO-2, HO-3, HO-5, and HO-8, or
equivalent), dwelling fire forms (excluding dwelling fire contents only coverage), landlord business owner policies (residential
policies of 4 units or less), and mobile homes, representing 98 % of the homeowners market. It excludes renters (HO-4) and
condominium (HO-6) data. In some instances, Difference in Condition (DIC) policies were included in the number of new,
renewed, and non-renewed counts.
2 Counties where 25% or more homes are in high fire risk. Ranked by highest exposure first: Tuolumne, Trinity, Nevada,
Mariposa, Plumas, Alpine, Calaveras, Sierra, Amador, El Dorado, Mono, Lake, Mendocino, Siskiyou, Butte, Lassen, Shasta,
Tehama, Santa Cruz, Humboldt, Napa, Del Norte, Modoc, and Placer.
3 See Appendix C in Cignarale, T., Laucher, J., Allen, K., & Landsman-Smith, L. (2017). The Availability and Affordability of
Coverage for Wildfire Loss in Residential Property Insurance in the Wildland-Urban Interface and Other High-Risk Areas of
California: CDI Summary and Proposed Solutions. California Department of Insurance’s Availability and Affordability Residential
Property Insurance Task Force.
Observations:
0.4%0.5%0.7%1.0%
5.2%8.4%10.1%
0.0%
5.0%
10.0%
15.0%
2015 2016 2017 2018 2019 2020 2021Percent
Year
FAIR Plan as a Percentage of Total Policies in the Counties where 25% or
more of the Homes are in High Fire Risk
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CALIFORNIA DEPARTMENT OF INSURANCE
Insurance Policy Count Data
11
1.While these numbers include the top 10 counties shown in Appendix C, the data in
Appendix D also includes an additional 14 counties with a quarter or more of the homes
in high fire risk areas.
2. For the most part, the trends in this table resemble the top 10 counties with the highest
fire risk, with decreases in year-over-year non-renewed homeowners and dwelling fire
policies, and an increase in renewal of such policies as well as steady growth in FAIR
Plan policies.
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Top Ten Tips for Finding Residential Insurance
We are aware there has been an increase in nonrenewals and understand that residential insurance is getting harder to
find in any area that insurers identify as having a higher than average risk of wildfire. While the Department of Insurance
doesn’t have the legal authority to tell insurers what level of risk they must write or where they must write insurance, we
can monitor that they are consistent in their decisions and that their decisions are based on considerations of risk, not
other biases. We are here to help you and have a number of tips to help you through this process.
If you get a nonrenewal notice, contact your insurer and ask if there are any specific actions you could take to
mitigate your risk and retain your coverage.
If you think your nonrenewal was unfair, you may file a complaint with us.
Don’t let these actions delay starting your search for a new insurer. Make sure you have done everything you can
do at your property to mitigate fire risk then start shopping for coverage.
In addition to contacting local agents or brokers in the vicinity of your home, you may wish to use our Residential
Insurance Company Contact List that provides toll free numbers for over 50 insurers that are licensed to sell
homeowners insurance. You can contact each of them to find the closest agent or broker or, in some cases, get a
quote from them directly.
If you need help from an agent that speaks a specific language, you can use our Find an Agent or Broker tool to find
one near you.
You can also utilize our Homeowner Premium Comparison Tool and Homeowner Coverage Comparison Tool to
compare premiums and coverages.
If your agent cannot help you find coverage with an insurer other than the FAIR Plan, you or your agent should
contact other agents and brokers who represent other insurers. Our Home Insurance Finder tool can help you
find other agents in your region or beyond and tells you which insurers they represent.
Understand that the California FAIR Plan is available to every homeowner as a last option for coverage. The
maximum limit written by the FAIR Plan on a residential property for all coverages combined is $3,000,000.
Because the coverage provided by a FAIR Plan policy is very limited, it is recommended that you supplement
the FAIR Plan policy with a Difference in Conditions policy.
If none of these options work for you, you may try obtaining coverage in the “surplus lines” market. Ask your agent
or broker if they are able to obtain coverage with a surplus lines insurer or obtain coverage through a surplus lines
broker (note, surplus lines insurers are not backed by the California Insurance Guarantee Association).
If you prefer to speak live with our staff, you are always welcome to call the Department of Insurance toll free at
1-800-927-4357.
insurance.ca.gov 800.927.4357
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