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.

Cases: 195684

Reported Deaths: 2587
CountyCasesDeaths
Multnomah38714593
Washington25787233
Marion22229308
Clackamas17677214
Lane13128149
Jackson10953140
Deschutes918074
Umatilla823684
Linn501768
Klamath450664
Yamhill449676
Polk378853
Malheur353063
Josephine337071
Douglas329871
Benton312720
Jefferson222037
Coos208935
Columbia175929
Union145123
Lincoln138821
Wasco138128
Hood River119631
Crook113822
Morrow111116
Clatsop9948
Baker95914
Tillamook6523
Curry64610
Grant5236
Lake4557
Harney3488
Wallowa1855
Gilliam631
Sherman581
Wheeler321
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California Coronavirus Cases

Data is updated nightly.

Cases: 3768805

Reported Deaths: 62690
CountyCasesDeaths
Los Angeles123741124115
Riverside2997934594
San Bernardino2971654724
San Diego2790983742
Orange2712515031
Santa Clara1190602096
Kern1092981376
Sacramento1049581691
Fresno1019571690
Alameda881481668
Ventura810331017
San Joaquin733101394
Contra Costa68976805
Stanislaus622491061
Tulare49830840
Monterey43662383
San Mateo42059570
San Francisco36795546
Santa Barbara34391459
Solano32974253
Merced31919461
Sonoma30067321
Imperial28504729
Kings23017246
Placer22688292
San Luis Obispo21308260
Madera16482242
Santa Cruz16264206
Marin14079227
Yolo13932211
Shasta12175226
Butte12095192
El Dorado10193113
Napa988782
Sutter9441113
Yuba628549
San Benito606863
Lassen570624
Tehama559063
Nevada475575
Tuolumne413967
Mendocino410849
Humboldt408042
Amador366647
Lake348543
Glenn240025
Siskiyou225525
Colusa223616
Calaveras213654
Inyo142838
Del Norte13988
Mono12844
Plumas7186
Modoc5014
Mariposa4507
Trinity4025
Sierra1120
Alpine880
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