What to know about home insurance crisis

New regulations could help improve the home insurance issues facing local residents but may not bring a quick fix, officials said earlier this week.

In 2017 and 2018, tens of thousands of homes were destroyed as some of California’s largest, most destructive wildfires burned. The list includes the Thomas and Woolsey fires in Ventura County. In the aftermath of those fires and others in recent years, more areas were deemed at high risk and insurance companies raised rates and canceled policies.

State law now requires insurers to look at steps homeowners take to protect against wildfires and hundreds of communities have signed up to be recognized for those efforts. But still, companies were not writing policies and some are leaving the state.

“We know that the insurance crisis is hitting everyone up and down the state,” said Julia Juarez, a deputy commissioner for the California Department of Insurance.

Juarez was one of several panelists at this week’s home insurance town hall in Thousand Oaks organized by county Supervisor Jeff Gorell. The new regulations should be in place by January, and the changes are expected to prompt companies to write more policies, she said.

State Assemblymember Jacqui Irwin, D-Thousand Oaks, co-hosted the panel discussion along with Gorell. Both called home insurance one of the biggest issues for their constituents, not only in areas at high risk from wildfires but throughout the region.

“Understandably, homeowners are extremely frustrated,” Irwin said.

Some have looked for agents out of state. Those lucky enough to find a policy had rates skyrocket. Many turned to California’s FAIR Plan, which offers less coverage, higher costs and was intended as a last resort.

What are the new home insurance regulations?

Plans call for developing regulations by the end of the year that would allow insurance companies to use modeling for catastrophic wildfires when developing rates, officials said. Previously, the modeling, described as forward-looking, could not be used in the state.

Officials described the current pricing of insurance policies as looking backward. So, insurance prices jumped up after big fires. Catastrophic modeling looks forward to determine risk and potentially takes other factors into account.

Under the proposed regulations, companies would be allowed to use the catastrophe models if they write more policies in areas with the biggest risk and the most people on the FAIR plan, according to the insurance commissioner’s office. Ventura was included on the state’s list of counties with more homes considered at high risk.

When will California’s insurance crisis turn around?

Plans call for the state to have everything in place by the end of the year, Juarez said. That would allow insurance companies to start turning in applications for rate reviews as early as January, she said.

But how long it takes companies to turn in applications or for rate reviews to be completed is not yet known. Juarez said officials expect to have applications approved by mid-2025. What will happen to rates also remains to be seen.

“What we need to do is create the market where they are going to then be competing to get your business,” Juarez said. “That is what’s going to then bring the prices down.”

Will home-hardening help people stay insured or get a discount?

Efforts to harden a home against wildfire or become recognized as a Firewise community can help with insurance policies. The number of those communities countywide has jumped from two to 21 in the past two years, officials said.

People have reported varying degrees of success regarding their insurance rates, said Stephen Watson, executive director of the Ventura Regional Fire Safe Council. The organization provides free wildfire assessments and has worked with communities on the Firewise recognition.

“What we’ve seen is anywhere from 1% all the way up to 27%,” Watson said during the town hall meeting.

Typically, it is 10% or lower, he said. The biggest reduction was reported by a homeowners’ association that did a lot of work after the Firewise recognition, he said, adding that he tells people to be proactive and shop around.

The wildfire assessments help identify ways residents can harden their homes against flames and embers. Fixes will make a home safer, Watson said.

“There are things you can do. There are things your community can do, and we can help you out with that,” he said. 

Juarez said this week that companies are now required to explain to homeowners the reason for their property’s wildfire risk score. People also can reach out to the state department of insurance at 800-927-4357 for assistance, she said.

To watch a recording of the town hall, visit youtube.com/@vcd2super/streams. More information about the fire safe council is available at venturafiresafe.org/.

Cheri Carlson covers the environment and county government for the Ventura County Star. Reach her at cheri.carlson@vcstar.com or 805-437-0260.