Bernard Molloy II is the fire chief for Murrieta Fire & Rescue. He can be reached at bmolloy@murrietaca.gov.

As California struggles through yet another catastrophic wildfire season, residents are facing the added burden of skyrocketing fire insurance premiums and canceled insurance policies. Many homeowners have been forced into the state’s last-resort insurance plan. While the California FAIR Plan provides coverage, it is often more expensive and less comprehensive than private insurance plans. 

Cities and their fire departments can play a crucial role in helping their communities secure better insurance rates. Fire departments can alleviate the financial strain on homeowners by driving community resilience initiatives, supporting wildfire mitigation programs, and ensuring defensible space compliance.

Regulatory landscape and insurance challenges

Fire insurance in California is a highly regulated industry, restricted by Proposition 103 (1988). The current system allows insurance companies to set rates based on risk factors, which usually results in higher premiums for residents in wildfire-prone areas. As more insurers pause or cease coverage for new properties in high-risk zones, more residents turn to the FAIR Plan. Over 350,000 homes are now under this plan, a significant increase from 250,000 two years ago.

Insurance companies are also hesitant to write policies in areas where they cannot cover 100% of potential claims. Gov. Gavin Newsom issued an executive order last September asking the Insurance Commission to take prompt regulatory action to expand coverage for consumers — particularly in underserved areas. The Insurance Commissioner responded by issuing the Sustainable Insurance Strategy, which would require insurers to write at least 85% of their statewide market share in distressed areas. 

It remains to be seen whether the regulations currently proposed by the Insurance Commission will bring the intended relief. The question is, when private insurance becomes available to these residents (making the FAIR plan unavailable to them), will the premiums be even higher than they were paying for the FAIR plan?

Ways to lower insurance rates

Amid these uncertainties, the California Department of Insurance has started taking steps to identify what residents and municipalities can do to ensure access to insurance. The Safer from Wildfires initiative is a critical element of the state’s strategy to reduce wildfire risk and, by extension, lower insurance premiums. This framework provides a process for home hardening and defensible space measures that reduce the likelihood of a home igniting during a wildfire. This includes proactively creating an ember-resistant zone within five feet of the house, removing flammable materials, trimming tree branches, and using fire-resistant building materials. Despite these recommendations, their impact on insurance rates has been slow to materialize.

The initiative aligns with the Wildfire-Prepared Home program by the Insurance Institute for Business and Home Safety, an industry trade group. Homeowners can receive lower rates after completing similar actions, such as creating a 5-foot noncombustible zone. The process can take weeks or months depending on the extent of the work.

Catastrophe modeling, an emerging tool in the insurance industry, could also play a role in determining rates if California regulators approve its use. These models assess the future wildfire risk for specific properties using artificial intelligence and data sets. While this method offers a more predictive understanding of risk, it lacks transparency — particularly around the inputs and standards used to assess wildfire mitigation.

The Insurance Commissioner’s Office recently announced a joint effort with Cal Poly Humbolt to develop the nation’s first public wildfire catastrophe model. Ideally, this model will give local municipalities credit for mitigation efforts.

How fire departments can make a difference

Fire departments are uniquely positioned to help residents navigate the fire insurance landscape. By engaging with community members and helping them reduce their wildfire risk, fire departments can potentially influence insurance rates — especially if catastrophe modeling allows for input about local mitigation steps. For now, there are two steps fire departments and municipalities can take to help lower insurance rates in their communities.

Firewise USA® is a voluntary program that helps neighbors take action to increase the ignition resistance of their homes and communities. Local fire departments can help guide neighborhoods to becoming recognized as Firewise Communities. This status not only improves overall safety but can also reduce insurance premiums.

Fire departments can also apply with their city for recognition as a Fire Risk Reduction Community. These communities adopt best practices for local fire planning, exceed state fire safety regulations, and prioritize wildfire hazard mitigation in their local hazard mitigation plans. Although the application period for this designation only opens every two years, achieving this status can have a long-term impact on local insurance availability and affordability.

The new list, which went into effect this July, has just 11 cities in the state. Murrieta is one of those 11 cities. Since July, Murrieta residents have seen a reduction in specific homeowners’ wildfire insurance rates by several hundred dollars annually. The more communities apply for this status, the more likely it is that insurance companies will implement it for all qualifying residents without question.

The role of defensible space programs

Though not directly tied to lowering insurance rates for residents (yet), defensible space is one of the most effective ways to protect homes from wildfires. Fire departments can play a crucial role in ensuring compliance with state regulations. 

In Murrieta, the fire service inspects over 14,000 properties for defensible space compliance each year. This has no direct impact on residents’ insurance rates. However, the city has documented several instances where a vegetation fire did not spread onto properties with mandated defensible space. With the increasing integration of catastrophe models in insurance rate calculations, these mitigation efforts could soon play a more significant role in reducing premiums. 

Fire departments can help prepare communities for these changes by maintaining proactive defensible space programs and tracking mitigation steps taken by residents. The next step will be ensuring the insurance industry checks with local agencies to see what mitigation efforts they take in their jurisdictions. Efforts to mandate this through legislation have failed, but upcoming catastrophe models could create a way for cities to provide this information.

How can fire departments shape these new regulations and models? 

The next few years will likely see increased transparency in the insurance rate-setting process, with public workshops and regulatory hearings expected through 2024. Fire departments should stay informed of these developments and be prepared to advocate for their communities. 

At the same time, fire departments should help homeowners understand and meet the SAFER From Wildfire and Wildfire-Prepared Home standards. City officials can help their communities secure better fire insurance rates by providing fire departments with the resources required to maintain a robust defensible space program and work through the somewhat arduous process of becoming a Fire Risk Reduction Community.

We have a real chance to increase our residents’ insurability as we help them navigate the fire insurance maze. Now we need the insurance companies to join us.

To learn more about whole community preparedness, attend “How Your City Can Help Secure Residents the Best Possible Insurance Rates” at the League of California Cities Annual Conference and Expo, Oct. 16-18. Be sure to check out the expo hall, which will include over 240 service providers.