California is considering insurance to deal with the costs of wildfires

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SACRAMENTO, Calif. (CA) – California should buy insurance to cover the costs of taxpayers in bad weather, a solution that could help stem losses as climate change contributes to more destructive outbreaks, said Thursday two responsible for the state.

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

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

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

The two state officials teamed up with Democratic Senator Bill Dodd of Napa to propose that California lawmakers authorize the governor, treasurer and the insurance commissioner to negotiate insurance coverage with creditors. private providers instead of self-insuring.

"It works like your home insurance, but for our current state," Lara told reporters. If the premiums, conditions and coverage are not favorable, he said the state could withdraw.

The gamble is paying off for Oregon, he said, under which the state has paid $ 61 million in premiums for nearly 40 years, but has recovered payments from the state. insurance of $ 102 million.

FEMA started taking out a $ 1 billion flood insurance in 2017, said Lara, with a $ 4 billion loss trigger. The government received all the benefits in 2018.

The purchase of insurance is part of a larger urgent debate about how California can better respond to forest fires that worsen with climate change, Lara said. . The state is also considering taking out obligations to cover the costs associated with forest fires in order to mitigate the growing impact on the budget, he said.

State private insurance could eventually be used for other disasters, such as earthquakes and tsunamis, depending on how it is written, Dodd said. It represents the wine region affected by forest fires two years ago.

Last year's fire became the nation's deadliest in a century and destroyed the city of Paradise, where Governor Gavin Newsom on Thursday praised two new laws granting emergency funding to affected local governments by fire.

State officials are also looking for ways to encourage private insurance for residents of fire risk areas who may not be insurable now, Lara said. This could include new unspecified insurance products, "something that is unique to California," said the Insurance Commissioner.

The premiums could go down as the state uses more to clear up tangled forests and utilities will prevent their equipment from causing wildfires, Dodd said.

The Howard Jarvis Taxpayers Association has stated that taxpayers should not be forced to subsidize insurance costs for residents who choose to live in hazardous areas.

"If it does not put taxpayers at risk and it's a way to spread the risk, it may sound logical, but we have to see the details," said group president Jon Coupal.

Ma, the treasurer, said in a statement that the insurance would make forest fire costs more predictable, help stabilize the budget and protect other spending needs. She missed the press conference by returning from Washington, DC, where she testified about allowing banks to serve the legal marijuana industry.