California OKs Farmers and Wildfire Risk Assessments, Will Bring 30K New Homeowners Policies

Farmers is the first carrier in California to submit underwriting guidelines that allow it to assess a home’s wildfire risk by using site-specific factors such as the use of fire-resistant building materials, said Deputy Insurance Commissioner Michael Soller.

Soller said the initiative fits in with Insurance Commissioner Ricardo Lara’s effort to get insurers to use more sophisticated methods of assessing risk so that homeowners are given incentives to take prevention measures, such as clearing vegetation and using fire-resistant materials. The Insurance Department in February announced proposed regulations that would create incentives for community wildfire mitigation initiatives and make coverage more affordable to homeowners who have invested in prevention measures.

“What Commissioner Lara wants to see is risk scores that reflect home-hardening actions that are really proven to prevent wildfire from catching your home on fire and spreading to other homes,” Soller said.

Many homeowners in California’s high-risk areas cannot find property insurance outside of the residual market, called the California FAIR plan. A report by the Department of Insurance last October shows that number of California homeowner policies that insurers refused to renew jumped 31% to 235,250 in 2019 from 179,458 in 2018. At the same time, the number of policies issued through the FAIR plan climbed to 190,196 from 140,138.

Farmers’ new risk scoring plan comes as California begins a new fire season amid severe drought conditions that elevate the wildfire risk even further. A report by says much of the U.S. West is suffering from an extreme drought and all but a sliver of California’s north coast line is in an abnormally dry or drought condition. founder and Chief Executive Officer Attila Toth said wildfires have caused $57 billion in economic losses and killed 194 people in the past five years.

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