In the last year, companies like Farmers Insurance, Allstate, and State Farm were offloading California clients and cancelling policies because of the fire risks. That left homeowners with few options, such as limited coverage at double or even triple the cost.
Some were pushed to the insurer of last resort, the California FAIR plan. California Deputy Insurance Commissioner Michael Soller describes that as "limited coverage at a higher cost. You pay more and you get less in terms of coverage. So getting people back to the regular market is our top priority."
The California Department of Insurance has been working on stabilizing the insurance market and on Dec. 31, Commissioner Ricardo Lara announced new regulations.
If insurance companies wanted to continue doing business in California, they would need to start writing policies in fire risk areas again.
"We're going to be implementing in these coming months all of these new rules ... so that insurance companies can get back to doing what they should be doing, writing policies for Californians in every corner of the state, including those who do have that risk of wildfire," Soller said.
But he said their return could come with requests from insurance companies before coverage is secured.
Homeowners may be asked to fire-proof their home with fire sprinkler systems, brush abatement, and home hardening solutions. Soller thinks there could also be requests that the cities, counties, and utility companies maintain land that is a fire hazard before a policy is issued.
When it comes to rates, the California Department of Insurance hopes to create a grant program that helps seniors or low income families pay for coverage or home hardening solutions.
This comes as the very event insurance companies feared, plays out in Los Angeles: Entire communities wiped out and millions in damages from wildfires.
Soller said the department is confident insurance companies are going to pay the claims. "We're going to be staying on this to make sure that insurance claims are paid fairly, fully, quickly. Getting money back into people's pockets right now is essential," he said.
What is yet to be discovered is how these events will impact the return of insurance companies to California's market, and their rates.
"This is only going to make things worse. We can expect, even before these wildfires, that we're going to see tremendous increases in insurance prices," said Dave Jones, a former insurance commissioner and the current director of the Climate Risk Initiative at UC Berkeley's Center for law energy and the environment.
He said insurance companies should first be held accountable for what they agreed to do, which is to come back to the California market, but in return, expecting higher rates for coverage.
And Jones said there is still the matter of addressing climate change, as well as maintenance of fire risk areas.
"It's a sad and tragic consequence of our failure to transition away from fossil fuels and other greenhouse gas emitting industries which are driving global temperature increases, driving more extreme and severe weather-related events like these massive infernos that are befalling California," he said.
