Image 01 Image 03

California OK’s Plan to Allow Insurance Companies to Use “Climate Crisis” to Inflate Rates

California OK’s Plan to Allow Insurance Companies to Use “Climate Crisis” to Inflate Rates

As climate panic is based on flawed modelling, it seems appropriate that the mathematical voodoo of new rates will be based on catastrophe modelling.

Legal Insurrection readers may recall that I reported State Farm, one of the largest insurance agencies in the country, was no longer accept applications for home and business insurance in California due to wildfire risks and the cost of rebuilding.

To stop more insurance companies from ditching California, the state’s insurance commissioner has approved plans for firms to use “climate change” as an excuse to gin up rates.

California will let insurance companies consider climate change when setting their prices, the state’s chief regulator announced Thursday, a move aimed at preventing insurers from fleeing the state over fears of massive losses from wildfires and other natural disasters.

Unlike other states, California does not let insurance companies consider current or future risks when deciding how much to charge for an insurance policy. Instead, they can only consider what’s happened on a property in the past to set the price.

…On Thursday, California Insurance Commissioner Ricardo Lara said the state will write new rules to let insurers look to the future when setting their rates. But companies will only get to do this if they agree to write more policies for homeowners who live in areas with the most risk — including communities threatened by wildfires.

As climate panic is based on flawed modelling, it seems appropriate that the mathematical voodoo of new rates will be based on catastrophe modelling.

Now, Lara said, he plans to go ahead and allow insurers to use catastrophe modeling that takes into account the projected impacts of climate change and other shifting factors when asking to raise rates. He also said that insurers will be allowed to include reinsurance costs for California coverage into rate filings, though the announcement did not go into specifics. Companies will be allowed to use these models only if they comply with their commitment to increase coverage in the state and reduce the FAIR plan population.

Lara also said that the insurance department finalized a change to the FAIR plan, first announced months ago, which increases the dollar amount that the plan is allowed to cover for commercial properties.

Before, it was capped at $7.2 million to $8.4 million for different types of commercial properties, which include condo associations, homeowners associations, affordable housing developments, and businesses such as wineries that are often located in areas with high fire risk. Now, that cap has been raised to $20 million for all types of commercial properties.

The real catastrophe will be when even more Californians flee the state on the quest for affordable housing.

The saddest part of this entire idiocy is that the root cause of wildfires is poor land management practices . . . many of which are based on flawed eco-activism theology.


Donations tax deductible
to the full extent allowed by law.


Why not sue the color purple? Makes as much sense.

    JohnSmith100 in reply to 2smartforlibs. | September 24, 2023 at 5:48 pm

    California should tie rates to proper forest management, that is the root cause of massive fires. Clean up deadfall. Make intentionally starting fires a capital crime. Use dead fall for Hügelkultur, maybe add illegals 🙂

    The color purple? No way! Little green men sounds much more plausible, and the CA legislature is totally into green.

    More rational than liberals ever thought of being.
    California just needs to learn to vote like democrats, just don’t get caught.

And every last insurance company will take advantage of this chance to increase rates.

    And many will still lose money doing business in CA. I’d like to see the rate schedules that the insurance commission draws up to allow increases for “climate change” while the current risks are discounted.

      chrisboltssr in reply to alien. | September 25, 2023 at 9:52 am

      They absolutely will. The amount of rate hikes insurance companies need to take will be astronomical. But that is 9nlh part of the problem, as insurers are effectively not allowed to discriminate on risks and must take all comers.

      Insurance companies only exist when they can make money writing policies. If you write $100 worth of policies and your expenses counting payouts are $95, you have a functional company. If the numbers are the other way around, you leave. All states (California most of all) have a two-way tug of war. They want the rates to remain low, but they want to maximize all policy payouts to make for happy (or at least less complaining) voters. CA has been signaling that they want payouts for mythical climate change ‘damages’ so the insurance companies are effectively slapping regulators in the face with a dead fish, saying “Put up or shut up. Either allow us to crank up rates to match the bribes you want paid out of our premiums, or face reality as we wave goodbye.”

    The smart ones will say no thanks and leave the state anyhow

Just punishing people for their imaginary issues.

It’s a competitive market unless there’s collusion. The rates settle out to whatever makes a reasonable profit and not more.

    Except that the state determines the final rates, profit be damned.

      rhhardin in reply to alien. | September 24, 2023 at 5:35 pm

      As I recall, insurance companies were leaving California, which would mean they can’t get rates high enough to make money. At worst then this is just a fake justification to raise rates to a point where the companies don’t lose money. Nothing to do with screwing the consumer but with retaining the presence of insurance companies.

        chrisboltssr in reply to rhhardin. | September 25, 2023 at 9:53 am

        And rest assured, any insurance company not domiciled in California is going to bail. There will be even more added pressure on insurance companies who are domiciled in California.

I guess that would make it a religious exemption.

Alternate headline:
California regulators overrule their own insurance industry mandates.

The Federalist article is okay, though journalism by long distance can be flawed.

Not from the federalist:

“On August 17, 2020, dry thunderstorms sparked 21 wildfires in the Plumas National Forest and Lassen National Forest.”

“Wind gusts of 50-70mph fanned flames and carried burning embers over ridges and into steep ravines.”

    4fun in reply to Tiki. | September 24, 2023 at 8:38 pm

    CA wildfires worse due to poor land management

    — Georgia Log Cabin (@GeorgiaLogCabin) September 5, 2021

      Tiki in reply to 4fun. | September 25, 2023 at 1:27 am

      I read the bloody article. I know the Western Slope, Plumas National Forest like the back of my hand. I’ve spent more than two decades adventuring in that specific region.

      I own an old, hardcore Jeep, and multiple enduro motorcycles and backpacks. I literally cut miles of single track trail – all legally sanctioned by the USFS. At my expense. I have more first hand experience in the Plumas than you -or the log cabin group – will ever know about that forest.

      Much of the area has been section logged for many decades. Other areas burned about twenty years ago. They never got to the inferno stage.

      The forest district is managed by rangers not hostile to small gold miners (dredging) logging and OHV users. I met on-site and discussed forest trail cutting with rangers on many occasions. I assure you that that is not the case in other USFS districts throughout the Western states.

      How do we manage hundreds of dry lightning strikes? The wiki article notes 21 simultaneous fires fanned by wind gusts.

      The western slope is incredibly rugged and huge in acreage. A prescribed burn program of the size the log cabin org talk about can only be made possible at the national level. That’s Washington DC level funding stuff, not district level at Oroville and Quincy.

      Realpolitik. Over the last forty years environmentalists like RFK Jr. destroyed regional sawmill capacity. We need a huge push to salvage tens of thousands of acres of ruined forest.

I’ll bet there was a lot of money promised to be paid under the table…

Step one: Set fire insurance rates using climate change “models”.
Step two: charge obscene premiums with the blessing of the state.
Step three: deny claims by stating lightning, arson, power lines and tossed cigarettes are not rooted in climate change.
Step four: funnel some of that extra cash to politicians and their pals.

    Then CA would have to re-write homeowners and business policies to specifically exclude losses by lightning, arson, and fire. That’s not going to fly. An insurance policy is nothing more than a contract. And it’s not possible to divert premium dollars to politicians and stay in business.

    chrisboltssr in reply to George S. | September 25, 2023 at 9:56 am

    If only it were that simple. It isn’t. Almost e ery last homeowners insurance policy would cover everything in Step 3. The “climate change: catastrophe modeling is just used for raising rates, not denying claims. Alien already responded to the politician payoff part.

Subotai Bahadur | September 24, 2023 at 5:39 pm

It may keep insurance companies from pulling out of the state . . . for a while. But in a time when there is a housing shortage and businesses are being pushed over the edge by political correctness and the state government is only concerned with aggravating the problem [try building new housing or businesses without insurance], it makes more and more sense for people and businesses to decide that California is not worth it, And while they may be able to make up for some of the lost population with the army of foreign invaders, said invaders do not provide the economic basis to hold the state together.

Eventually the money and people going out will overcome whatever claimed efforts the state makes. Already, they are projecting [if we are still a country and still have a census and a Congress] that in 2030 that California is going to lose 5 congressional seats and 5 electoral votes. There are other factors. I understand that in a couple of years a certain anti-pollution fitting will be mandatory in California on all diesel truck/trailers. The problem is that it is way expensive and it breaks down in a fairly short distance and has to be replaced. At that point, it makes a lot more sense for truckers just to avoid California, Which means not only that California cannot export California goods to the rest of the country, but also that they cannot import goods from the rest of the country. And it makes using California ports to bring in foreign goods unfeasible.

Markets and transportation routes change in response to conditions. My daughter and son-in-law had a business repairing/inspecting/certifying those big cranes used to load and unload container ships. My son-in-law and his crew were bloody good at it and were in high demand. But as traffic in the Bay Area declined [primarily Oakland] it made more sense to move. So they went to Portland and did well there until my son-in-law died. There is no reason that California has to be the gateway for imports if they are busy trying to destroy all businesses.

Subotai Bahadur

    JohnSmith100 in reply to Subotai Bahadur. | September 24, 2023 at 5:59 pm

    Some time ago I read about a person in California who had paid $75,000 in permit fees just to build a shipping container home, and that he was also being forced to do lots of unnecessary & expensive stuff based on their whims. Most certainly many of the things mandated by building codes are meant to drive up taxable value.

It would be far more straightforward pricing to simply allow Insurance Companies operating in CA to do what they do elsewhere; set premiums based upon realistic risk models. Instead CA politicians whose foolish policies largely created these risks ate going for a twofer.

They get to blame rate increases on ‘climate change’ and avoid accountability from PO policy holders who would otherwise see the specific hazards and risk levels associated with their properties. The policyholders would then be in a position (those who need help in the common sense dept anyway) to see that increased rates for wildfire just might have something to do with Cray Cray environmental policies; no thining, no forest access road maintenance, no logging which are routine mitigation measures elsewhere.

Bottom line is the State and it’s weirdo policies that effectively preclude proper management and risk mitigation are at fault for increasing premiums not the insurance companies themselves. Anyone blaming the insurance companies here is falling into the trap set by CA politicians to avoid their own culpability.

    It seems to me that this is just a nomenclature scam. The actuaries can do their normal risk analysis and rate adjustment practices. They just have to call a wildfire prone area “Climate Change A” risk; and call a flood prone area “Climate Change B” area risk. Everybody is happy except the premium payers. The insurance companies get the money they need and the politicians can continue their stupid forest management and other policies without consequence.

      CommoChief in reply to jb4. | September 25, 2023 at 1:05 pm

      Yeah basically that’s it and the benefit to the weirdo CA politicians who refuse to allow basic forestry management and wildfire mitigation measures are off the hook b/c many ratepayers won’t make the connection.

      That’s the sad part. The rates would be lower if proper risk mitigation were allowed to take place but the weirdo CA politicians and their environmental whacko ideology won’t allow it.

When they say the new rules will only apply to insurers willing to write more policies for homeowners in the most at risk areas, do they mean offer, or do they mean actually have policies with?

Insurers can offer policies, but if you’re having to pay 50% of your house cost each year in insurance it’s not viable to actually buy the policy.

Given that ALL states would be subject to the alleged increased insurance risk of climate change, the events in CA would seem to be the industry’s attempt at normalizing such rate increases across the national market.

They just picked the most gullible leftists to inflict it on first.

Psssst, modeling only contains one L.
California is sunk.

A look inside many of these insurers will expose as woke of a place as exists anywhere. They all deserve each other.

The rest of us… not so much.

You will own nothing and be happy. How do you get there? Make everything from automobiles to houses too expensive to own

The anti-business morons of the CA Department of Insurance finally find a reason to allow rate increases, but do so based on a fake problem backed by zero actuarial proof and one big political lie. Worst Department of Insurance in the country!

In ten years:

Did you have home owners insurance in California in the years 2023 to 2033?
You may be entitled to compensation.
The insurance companies used bad data generate by unpredictive models based on bad science to raise rates. Contact The Law offices Saul Goodman and Associates for information about joining this class action suit.