California’s Insurance Department took a significant step to stabilize the state’s property insurance market, which is staggering as insurers drop coverage due to wildfire risk.
The department advanced a plan to let insurers charge premiums based on the projected risk of wildfires — an approach that accounts for future climate change, which insurers have been barred from considering when they set rates.
Insurers say they need to set rates based on projected risk instead of on past losses, as California law has required. State Insurance Commissioner Ricardo Lara’s July 24 actions aim to give them both the authority and technical tools to do so.
Michael Wara, director of Stanford University’s Climate and Energy Policy Program, called Lara’s action “a big step forward.”
