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California Considers Insurance to Help With Wildfire Costs

California has experienced 11 of the top 20 most destructive fires in its history since 2007.

Posted: Feb 14, 2019 4:10 PM

By DON THOMPSON , Associated Press

SACRAMENTO, Calif. (AP) — California should get insurance to help cover taxpayers' costs in bad wildfire seasons, a solution that could help stem losses as climate change contributes to more destructive blazes, two state officials said Thursday.

The most populous state should follow the lead of Oregon, the World Bank and the Federal Emergency Management Agency after outspending its emergency fund in seven of the last 10 years, California Insurance Commissioner Ricardo Lara and Treasurer Fiona Ma said.

California spent nearly $950 million two years ago, about $450 million more than was budgeted and by far the highest annual amount. It spent about $677 million last year, as wildfires again swept through cities, suburbs and more rural areas.

California has experienced 11 of the top 20 most destructive fires in its history since 2007.

The two statewide officeholders teamed with Democratic state Sen. Bill Dodd of Napa to propose that California lawmakers allow the governor, treasurer and insurance commissioner to negotiate insurance coverage with private providers, instead of self-insuring.

"It works just like your home insurance, but for our actual state," Lara told reporters. If the premiums, terms and coverage aren't favorable, he said the state can walk away.

The gamble paid off for Oregon, he said, where the state paid $61 million in premiums over nearly 40 years but recouped $102 million in insurance payments.

FEMA began buying $1 billion in flood insurance in 2017, Lara said, with a payout triggered by $4 billion in losses. The government received the full benefits in 2018.

Buying insurance is part of an urgent larger discussion on how California can better respond to wildfires worsening with climate change, Lara said. The state also is considering taking out bonds to pay for wildfire costs to lessen the growing effect on the budget, he said.

The state's private insurance potentially could be used for other disasters like earthquakes and tsunamis, depending how it's written, Dodd said. He represents the wine country area hit hard by wildfires two years ago.

A fire last year became the nation's deadliest in a century and leveled the town of Paradise, where Gov. Gavin Newsom spent Thursday touting two new laws providing emergency funding to fire-hit local governments.

State officials also are seeking ways to encourage private insurance coverage for residents of fire-prone areas who may be uninsurable now, Lara said. That could include unspecified new insurance products, "something that's unique to California," the insurance commissioner said.

Premiums could drop as the state does more to thin tangled forests and utilities work to keep their equipment from sparking wildfires , Dodd said.

The Howard Jarvis Taxpayers Association said taxpayers should not be put in the position of subsidizing insurance costs for residents who choose to live in dangerous areas.

"If it's not putting taxpayers at risk and it's a way to spread the risk, it might make sense, but we'd have to see the details," group president Jon Coupal said.

Ma, the treasurer, said in a statement that insurance would make wildfire costs more predictable, help stabilize the budget and protect other spending needs. She missed the news conference while flying back from Washington, D.C., where she had been testifying about allowing banks to service the legal marijuana industry.

Oregon Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 20635

Reported Deaths: 348
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Multnomah476293
Washington299124
Marion283769
Umatilla222127
Clackamas150039
Malheur75513
Deschutes5829
Lane5653
Jackson4472
Yamhill42913
Lincoln4129
Union3942
Morrow3493
Jefferson3464
Polk30812
Linn27110
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Wasco1813
Benton1646
Douglas1481
Josephine1132
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Coos900
Clatsop840
Crook431
Baker380
Tillamook340
Lake320
Wallowa191
Sherman150
Curry140
Harney100
Gilliam40
Grant40
Unassigned00
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California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 546814

Reported Deaths: 10133
CountyConfirmedDeaths
Los Angeles2042584919
Riverside40452799
Orange38754704
San Bernardino34939497
San Diego31127583
Kern22009160
Fresno16625157
Alameda12884206
San Joaquin12119192
Santa Clara11336196
Sacramento10544155
Tulare10475196
Imperial9601240
Stanislaus9408151
Contra Costa8760136
Ventura803582
San Francisco732664
Santa Barbara665268
San Mateo5978120
Marin525778
Monterey515635
Merced485562
Kings445356
Solano395939
Sonoma335844
Madera226736
Placer209920
San Luis Obispo204716
Yolo166042
Santa Cruz12294
Butte10608
Napa104610
Sutter8936
El Dorado7161
San Benito6994
Lassen6380
Yuba5724
Shasta4119
Mendocino36310
Colusa3624
Glenn3603
Nevada3211
Humboldt2804
Tehama2711
Lake2202
Amador1620
Mono1531
Tuolumne1472
Calaveras1361
Del Norte960
Siskiyou920
Inyo863
Mariposa602
Plumas340
Trinity50
Modoc40
Sierra30
Alpine20
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