TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Bernard Molloy, Fire Chief
SUBJECT: Update on Efforts to Improve Insurance Rates for Murrieta
Residents
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RECOMMENDATION
recommendation
Receive and file.
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PRIOR ACTION/VOTE
None.
CITY COUNCIL GOAL
Provide a high level of innovative public safety.
BACKGROUND
In 1988, Proposition 103 established California Insurance Code Sections 1861.01-1861.16 found in Title 10 of the California Code of Regulations. These codes allow for a competitive rating system to permit insurance rates to be set based on risk factors as well as the specific territories where the insurance is issued. Over the past two years, there has been a significant increase in the number of property owners having their homeowner’s insurance non-renewed, with the reasoning provided being the insured properties’ nearby risk of wildfire. This problem, being seen all over California, elicited a response from the California Insurance Commissioner to try to resolve this issue.
On February 3, 2023, the California Insurance Commissioner released a plan to put in place a framework that would consider wildfire mitigation efforts taken by the homeowners and local jurisdictions when being issued insurance. This framework, known as the Safer from Wildfires plan, has a list of steps homeowners can take to prepare their homes for fire, most of which involve home hardening. Insurance companies were given 180 days to comply with this new direction. On September 23, 2023, the Governor signed Executive Order (N-13-23) requiring insurance companies to write no less than 85% of their state-wide market share in distressed areas to remove residents from the California FAIR plan, which was previously established to assist homeowners that are unable to find insurance in the traditional marketplace. This initiative also required recognition and home hardening credits as outlined in the Safer from Wildfires plan. The press release accompanying the Executive Order contained language making it clear that residential insurance rates would rise. Within the weeks following this new Executive Order, many major insurance agencies elected to pause or suspend new policies in California, leaving only five of the previous top 12 insurance companies writing policies in the state, with many of them stating rate increases will occur at the time of policy renewals.
Fire departments and local jurisdictions have limited actions they can take to assist in decreasing insurance rates for their residents. If the Safer from Wildfire framework is followed, there are only three actions Murrieta can take to assist in lowering rates: robust defensible space enforcement, assisting with neighborhoods becoming officially designated as “Firewise” communities, and applying for recognition as a “Fire Risk Reduction Community” through the California Board of Foresters. Murrieta Fire & Rescue (MFR) has addressed all these steps and is actively watching to see how this will impact insurance rates in Murrieta. MFR will continue to monitor this situation and aggressively pursue opportunities to improve residents' rates.
FISCAL IMPACT
None.
ATTACHMENTS
None.