Mercury announced it will also expand existing discounts for homeowners who take steps to reduce wildfire risk; like clearing vegetation or using fire-resistant construction materials. (Credit: Kyle/Adobe Stock)
California’s third-largest home insurance company has agreed to write more homeowners’ business in areas at high risk of wildfires as part of its latest rate filing.
Mercury Insurance recently announced it has submitted a rate filing for its California Homeowners program based on the state’s Sustainable Insurance Strategy (SIS). This makes it the first insurer to use Verisk’s recently approved wildfire catastrophe model. Once approved, Mercury says this filing will allow the company to grow its presence in areas with higher wildfire risk that have previously struggled to find substantial, affordable homeowners policies.
The SIS is an attempt from the California Department of Insurance and Commissioner Ricardo Lara to stabilize the state’s insurance market. The DOI’s website explains, “Commissioner Lara implemented an aggressive approach to modernize insurance regulations. These updates are designed to better address consumer needs and increase the availability of insurance coverage statewide — including securing the first-ever guarantee of coverage.”
In its filing, Mercury agreed to cover more homes in areas of California where wildfire risk has driven away other insurance companies. In exchange, Mercury was allowed to propose a rate increase based on modeling that utilizes climate data and other conditions to predict property damage from potential future disasters.
Mercury’s rate filing calls for an overall average rate increase of 6.9%, which it says reflects inflationary costs and catastrophe exposures.
In addition to expanding its coverage, Mercury announced it will also expand existing discounts for homeowners who take steps to reduce wildfire risk, like clearing vegetation or using fire-resistant construction materials. Those who live in what the insurer calls “fire-prepared communities” that take collective steps to mitigate wildfire risk will be eligible for an additional discount.
"Commissioner Lara's Sustainable Insurance Strategy (SIS) will help stabilize the California homeowner's insurance market," Gabriel Tirador, Mercury CEO, said in a release. "Our filing is the first step toward Mercury's goal of expanding insurance options for California homeowners and underscores our 60-year commitment to California customers and agents. As other companies scaled back their California operations, Mercury stepped up to provide more options for our agents and customers, and we are committed to continuing our efforts to help protect our California neighbors well into the future."
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