AB 478: Wildfires: insurance.

Existing law generally regulates classes of insurance, including residential property insurance. The Insurance Rate Reduction and Reform Act of 1988, an initiative measure enacted by Proposition 103, as approved by the voters at the November 8, 1988, statewide general election, prohibits specified insurance rates from being approved or remaining in effect that are excessive, inadequate, unfairly discriminatory, or otherwise in violation of the act. In considering whether a rate is excessive, inadequate or unfairly discriminatory, existing law requires the Insurance Commissioner to consider whether the rate mathematically reflects the insurance companys investment income. Existing law authorizes the provisions of Proposition 103 to be amended by a statute that furthers the purposes of the act and is enacted by the Legislature with a ²/₃ vote.

For insureds 65 years of age or older, this bill would limit an increase in their yearly premium for a policy of residential property insurance by no more than 25 percent for insured property located in a high or very high fire hazard severity zone, as identified by the State Fire Marshal, as specified, and allow only one premium increase in a 5-year period. The bill would allow the increased premium to be paid over a 3-year period as part of the insureds residential property insurance premium payments.

Because the bill would limit the commissioners discretion to approve a rate increase, the bill would amend Proposition 103 and thus require a ²/₃ vote. The bill would declare that its provisions further the purposes of the act.

Existing law prohibits an insurer from canceling or refusing to renew a policy of residential property insurance for a property located in a ZIP Code within or adjacent to a fire perimeter for one year after the declaration of a state of emergency if the cancellation or nonrenewal is based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.

This bill would additionally prohibit an insurer from canceling or refusing to renew a policy of residential property insurance based solely on the fact that the insured property is located in a high or very high fire hazard severity zone, as identified by the State Fire Marshal, if the insured is 65 years of age or older.