(Bloomberg) --California adopted a rule that aims to bolster access to home insurance in the state, after several major carriers retreated from the market amid growing risk of wildfires.
The rule, which takes effect Jan. 2, allows insurance providers to compute policy rates by using catastrophe models that incorporate the growing risk of climate change as well as mitigation efforts, instead of relying solely on historical disaster data, the California Department of Insurance said in a
"For the first time in history we are requiring insurance companies to expand where people need help the most," state Insurance Commissioner Ricardo Lara said in Friday's statement.
It has been another devastating wildfire season in California. A wind-driven fire in Malibu continued to smolder Monday, a week after breaking out and charring more than 4,000 acres and destroying 20 structures including homes, according to
Major insurance firms including State Farm, Hartford Financial Services Group Inc. and Allstate Corp. have retreated from California in recent years, deterred by a regulation that didn't allow them to price home insurance policies appropriately.
As insurers stopped writing new business, a growing share of California homeowners were forced to turn to the state's property insurer of last resort. As of September, the California FAIR Plan insured about 452,000 homeowners and faced $458 billion of potential losses, up from about 203,000 policies for an exposure of $153 billion four years earlier.
The plan's president, Victoria Roach, said earlier this year that it was financially
Consumer Watchdog, a Los Angeles-based nonprofit, criticized the new rule, saying in a
