The California Assembly Insurance Committee has approved Assembly Bill 1236, which proposes the creation of the Climate and Sustainability Insurance and Risk Reduction Grant Program.
The initiative aims to support the development of new insurance models, including community-based and parametric products, as part of a broader effort to address coverage gaps for climate-related risks.
The legislation seeks to respond to growing concerns over the affordability and availability of insurance for natural disasters, such as wildfires and floods. According to the bill, fire insurance is becoming more costly and difficult to obtain in California, while flood coverage remains uncommon and insurance for extreme-heat events is rare.
If enacted, the program would be administered by the California Department of Insurance (CDI). The department would focus on designing and funding scalable insurance solutions to improve resiliency in communities, particularly those with high rates of uninsured or underinsured climate exposures.
The CDI said that the initiative would place special emphasis on low-income areas that face increased climate risk.
The CDI would also lead efforts to develop proof-of-concept projects and test alternative coverage models, including parametric insurance and community-based structures. In addition to exploring new coverage formats, the program would examine the effectiveness of risk reduction strategies and promote public education about the role of insurance in disaster preparedness and recovery.
Insurance Commissioner Ricardo Lara has endorsed the bill and previously testified about the potential for innovative insurance products to improve market stability and expand access to coverage in California.
Assembly Bill 1236 is now under review by the Assembly Appropriations Committee. The CDI said it will continue to support the bill as it progresses through the legislative process.
Earlier this month, the assembly also passed the FAIR Plan Stabilization Act (Assembly Bill 226) in a unanimous 72-0 vote, moving the measure to the state senate, where it has been read and referred to the Committee on Rules for assignment.
The bill would authorize the California FAIR Plan to access additional financial capacity through the issuance of bonds or the establishment of a line of credit. The legislation follows a recent $1 billion assessment issued by the FAIR Plan.
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