California Insurance Commissioner Ricardo Lara has issued a one-year moratorium on nonrenewals and cancellations for residential property policies in 18 ZIP codes impacted by the Thompson Fire.
The moratorium, affecting around 46,000 policyholders, took effect on July 3, the day Gov. Gavin Newsom declared a state of emergency in Butte County due to the fire, according to a bulletin issued by the commissioner on July 11. Insurance carriers are required to rescind any cancellation or nonrenewal notices issued due to wildfire risk since July 3.
According to AM Best, state statutes updated in 2018 grant the insurance commissioner the authority to enact moratoriums in areas within and adjacent to declared wildfire emergencies. Homeowners with total losses are provided up to 24 months of protection from nonrenewal and cancellation, according to the commissioner’s office.
This year, more than 3,500 wildfires burned approximately 207,400 acres and destroyed or damaged 128 structures, according to the governor’s office. This is significantly above the five-year average of 38,593 acres burned and exceeds the 10,080 acres burned at this time last year.
Newsom noted in a release announcing the expansion of the state’s aerial firefighting capabilities and further investments in wildfire risk management that the last couple of years had historically low levels of wildfire, but this season is shaping up to be very active, bringing the threat of dangerous wildfires to many parts of California.
In March, the state began allowing insurers to base projected wildfire, terrorism, and flood losses on catastrophe models, a move Lara said was aimed at stabilizing the faltering property insurance market.
The five largest writers of homeowners multiperil insurance in California during 2023, based on direct premiums written, were: State Farm Group, 19.92%; Farmers Insurance Group, 14.93%; CSAA Insurance Group, 6.52%; Liberty Mutual Insurance Group, 6.5%; and Mercury Casualty Group, 6.11%, according to AM Best.
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