State Senator Josh Becker (D-Menlo Park) announced that SB 1060, the Fire Insurance Risk Evaluation Act (FIRE Act), is designed to address California’s escalating insurance rates. The proposed legislation requires property insurance providers to consider wildfire mitigation efforts when underwriting insurance policies. Becker shared this information in a press release dated April 24.
"Our state is facing an unprecedented crisis of skyrocketing insurance rates and insurance companies canceling policies or leaving the state altogether because of the added risk of extreme wildfires caused by climate change," said Becker. "The FIRE Act has a simple and fair premise: If you do the work and invest in home hardening, defensible spaces, and forest treatment, you should get credit for that. The FIRE Act incentivizes lowering wildfire risk, which could lower insurance losses and make insurance more available."
According to Bankrate, California residents are grappling with the challenge of finding affordable home insurance. The combination of wildfire risks and increasing home construction costs has led seven of the state’s largest homeowner’s insurance providers, including State Farm, Allstate, USAA, and Farmers, to limit their business in the state. These companies have recently declared restrictions on the number of new policies they will write in California. Consequently, state residents are faced with limited options and high costs.
The FIRE Act seeks to alleviate this crisis by requiring insurers to consider the investments California has made to reduce the risk of wildfires, as per the press release. The state is investing billions of dollars in mitigation efforts such as forest treatment and home hardening. The bill was passed by the Senate Committee on Insurance on April 24 and will now be considered by the Senate Appropriations Committee.
The rising costs in the state are particularly burdensome for low-income and nonwhite Californians, according to data from the California Budget and Policy Center. Approximately 60% of households earning less than $50,000 reported struggling financially in June, while about half of black and Latino households reported difficulties affording basic necessities.
Adding to the affordability crisis in the insurance market is an increase in car insurance costs. According to data from U.S. Bureau of Labor Statistics, car insurance costs have risen by 22.2% over the last year.
Becker was elected to represent California's 13th Senate District in 2020, as per his official website records. He currently serves as chairman of the Senate Budget Subcommittee on Resources, Environmental Protection, and Energy.