The insurance landscape in California has become more precarious as a result of the severe and incessant wildfires. The great urban fires of the 19th century caused many insurers to become insolvent. These great wildfires, not even in urban areas, are having similar property insurance market impacts—especially in California.

I had breakfast with Amy Bach of United Policyholders yesterday. We agree that there are no easy answers to the entirety of the problem. People need property insurance that is affordable. Yet, the greater the frequency and severity of loss, the more property insurance has to cost. There is no free lunch in the economics of insurance. Some policyholders may find they cannot afford to own property as rates must rise. Banks are not going to finance properties without fire insurance.

I encourage readers to visit the United Policyholders website. One article, Commissioner Lara submits first-in-nation wildfire safety regulation to drive down cost of insurance, shows one attempt to keep the cost of insurance affordable while lowering the risk of damage from wildfires:

Insurance Commissioner Ricardo Lara submitted his insurance pricing regulation to the California Office of Administrative Law that would recognize and reward wildfire safety and mitigation efforts made by homeowners and businesses. The 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 Office of Administrative Law has 30 working days to determine whether the proposed regulation satisfies the requirements of the state’s Administrative Procedure Act. Once approved, the regulation text will be filed with the California Secretary of State and become state law.


The regulation incorporates ‘Safer from Wildfires,’ a new framework of wildfire safety measures created in January 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.’

These risk management initiatives are extremely important. Reducing the frequency and severity of the wildfire risk is the only way we can lower the cost of insurance in the long run. Merlin Law Group has been a longtime supporter of United Policyholders. They regularly meet insurance regulators with a “seat at the table.” There is no other consumer organization like it in the country. Thank goodness for the great work they do.

Thought for The Day

In everyone’s life, at some time, our inner fire goes out. It is then burst into flame by an encounter with another human being. We should all be thankful for those people who rekindle the inner spirit.
—Albert Schweitzer