Sacramento, CA—Today, the Senate Committee on Insurance passed a crucial bill to address the skyrocketing cost and dwindling availability of insurance in California.
SB 1060, the Fire Insurance Risk Evaluation Act (FIRE Act), by Senator Josh Becker (D-Menlo Park), requires property insurers to consider the wildfire risk reduction benefits of hazardous fuel reduction, home hardening, defensible space, and other fire prevention activities by incorporating these mitigation activities into insurance underwriting models. In doing so, the FIRE Act will allow insurance customers to benefit from the significant investments that California has made to reduce wildfire risks.
“Our state is facing an unprecedented crisis of skyrocketing insurance rates and insurance companies canceling policies or leaving the state altogether because of the added risk of extreme wildfires caused by climate change,” said Becker. “The FIRE Act has a simple and fair premise: If you do the work and invest in home hardening, defensible spaces, and forest treatment, you should get credit for that. The FIRE Act incentivizes lowering wildfire risk, which could lower insurance losses and make insurance more available.”
To address the insurance crisis, insurance underwriting models should account for the mitigation benefits of the billions being invested in forest treatment, home hardening and defensible space. A 2021 study published by The Nature Conservancy and global insurance broker Willis Towers Watson found forest treatment reduced modeled average annual insurance losses for a community of 81,000 homes by 40-60% and could save a total of $21 million annually by reducing insurance losses. By directing property insurers to incorporate wildfire risk reduction associated with hazardous fuel reduction, home hardening, defensible space, and other fire prevention activities in underwriting risk models, SB 1060 will ensure that underwriting models fairly give credit for the billions of dollars that California has invested in wildfire resilience, forest health, and community protection. In doing so, this bill will result in more available insurance coverage for Californians.
SB 1060 is sponsored by The Nature Conservancy. It now heads to the Senate Appropriations Committee for its consideration.