California Insurance Commissioner Ricardo Lara said this week that insurance companies in the state will soon be allowed to factor in climate risks including wildfires in their insurance rates — if they increase their underwriting in at-risk areas to wean consumers off state-funded coverage.
Reuters reported that in the last year or two, seven of the state’s top 12 insurers have paused or restricted new business, including State Farm and Liberty Mutual, and the government’s Fair Access to Insurance Requirements (FAIR) Plan, intended as an insurer of last resort, has grown to a 3 percent share of California’s market.

“We are at a major crossroads on insurance after multiple years of wildfires and storms intensified by the threat of climate change,” Lara said.
Unlike other states, according to an ABC News report, California does not allow insurance companies to consider current or future risks when setting the rate for an insurance policy. Companies can consider only what’s happened on a property in the past to set the price.
And insurers say that restriction makes it difficult to accurately price the risk.
On Thursday, Lara said California will write new rules to let insurers look to the future when setting their rates. “Modernizing our insurance market is not going to be easy or happen overnight,” he said. “We are in really unchartered territory and we must make difficult choices when the world is changing rapidly.”
The rule change is not all good news — it could mean higher rates for homeowners who have already seen dramatic increases. Eight insurance companies in California have requested increases of at least 20 percent this year, according to the California Department of Insurance.
Harvey Rosenfield, the author of a 1988 ballot proposition that regulates insurance rates, said Lara’s announcement “will dramatically increase homeowner and renter insurance bills by hundreds or even thousands of dollars.”
El comisionado de Seguros de California, Ricardo Lara, dijo esta semana que a las compañías de seguros del estado pronto se les permitirá tener en cuenta los riesgos climáticos, incluidos los incendios forestales, en sus tarifas de seguro, si aumentan su suscripción en áreas de riesgo para que los consumidores dejen de recibir cobertura financiada por el estado.
Reuters informó que en el último año o dos, siete de las 12 principales aseguradoras del estado han detenido o restringido nuevos negocios, incluyendo State Farm y Liberty Mutual, y el Plan de Acceso Justo a los Requisitos de Seguro (FAIR, por sus siglas en inglés) del gobierno, pensado como una aseguradora del último año. resort, ha crecido hasta alcanzar una cuota del 3 por ciento del mercado de California.