The California Department of Insurance has approved and put into place a new regulation effective October 14, 2022. The regulation requires insurers to submit new rates incorporating wildfire safety standards and to establish a process for releasing wildfire risk determinations to residents and businesses within 180 days. The wildfire safety standards have been created by the Department to help insureds protect their property from wildfires.
The regulation incorporates the Safer from Wildfires framework, which helps insureds take steps to reduce the risk of property damage and help prevent the spread of wildfires. Insurers are to provide discounts to those insureds adhering to the Safer from Wildfire recommendations.
Included in the regulation are definitions for terms related to the Safer from Wildfire recommendations such as Class-A Fire Rated Roof, Enclosed Eaves, and Fire-Resistant Vents. Mandatory factors such as community-level mitigation designations, property-level mitigation efforts, building hardening measures and others are explained. Optional factors that may be included in the determination of whether a property is protected from wildfire hazards are also outlined, and include fuel, slope, access, direction of slope and other factors.
The rating plans and documentation submitted to the department will be available for public inspection. The data used to support the rates must be credible, or contain a credibility weight. If the department creates a fire and wildfire exposure risk manual, insurers may rely on the version of the manual in current use at the time the rates are developed. Insureds will be provided with their wildfire risk score or risk classification if the insurer is using a Wildfire Risk Model or rating factor to create a rate differential based on insured risk factors. The risk factor will be made available to the insured or applicant no later than fifteen days following the submission of a completed application, at least forty-five days prior to renewal and seventy-five days before nonrenewal. For insureds that have completed risk mitigation measures since the score was last calculated, the insurer shall provide a revised score within thirty days of receipt of information concerning the mitigation measures.
Insured's have a right to appeal the score and insurers are required to notify insured's of that right and how to file for such an appeal. Appeals must be acknowledged in writing by the insurer within ten days of receipt, and a written response with a reconsideration and decision is required within thirty days of receipt of the appeal. An insured may make the appeal to his agent, who will then send the appeal to the insurer within five calendar days.
The insurer is to explain the wildfire risk score or classification, along with information as to what mitigation measures could affect the score and what premium reduction the insured would receive for taking such mitigation measures. A full copy of the regulation may be found here and the bulletin may be found here.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.