California Gov. Gavin Newsom signed an executive order he said will help mitigate the impacts and better allocate the costs of natural disasters while stabilizing the insurance market and energy utility sector.
The executive order calls for multiple state agencies and departments to collaborate on research to develop tools to mitigate and allocate the costs of recovering from natural catastrophes, stabilize the insurance market and utility sector, make insurance more affordable and accessible, protect ratepayers, and ensure compensation for wildfire survivors.
Related: California Department of Insurance Completes Final Review of Wildfire Model
The executive order dovetails Senate Bill 254, which created the state’s Wildfire Fund to support wildfire survivors and protect ratepayers from utility liability costs. SB 254 directs the state’s Wildfire Fund administrator to prepare a report by April 2026 analyzing new approaches to responding to catastrophes, including wildfires.
The executive order expedites the state’s work to undertake that analysis.
The order directs the Department of Forestry and Fire Protection, Office of Emergency Services, and Office of Energy Infrastructure Safety to collaborate with the California Public Utilities Commission and the California Department of Insurance to provide recommendations to the Wildfire Fund Administrator.
The California Earthquake Authority is the Wildfire Fund administrator. The CEA is charged with evaluating and preparing a report on reforms to California’s energy utility and insurance markets. CEA is tasked with collaborating with state agencies on the study.
It directs the CDI to assess property insurance accessibility and affordability “in light of climate-driven and natural catastrophes,” and for the CPUC and CDI to explore alternative risk-sharing structures for catastrophic damages.
“There’s no Republican or Democrat thermometer – red and blue states alike, and countries around the world, are facing this climate-fueled insurance crisis,” Newsom said in a statement. “And California is taking action. Already, we’ve seen positive action to stabilize our home insurance market as insurers submit plans to write policies in areas where Californians have been running out of options. We’re taking a whole-of-government response to protect Californians from wildfire while boosting coverage options and bringing down costs.”
California Insurance Commissioner Ricardo Lara greed with the need for a “whole-of-government” response, and said the progress made so far to address the state’s homeowners insurance crisis is bringing insurance options back to Californians.
“Five major insurance companies, including three of our top homeowners carriers, have committed to stay and grow in California,” Lara said in a statement. “That marks a major turning point from past practices under past insurance commissioners where companies raised rates while dropping policyholders.”
Topics California
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