Bill Text: CA AB2416 | 2023-2024 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Residential property insurance: wildfire risk.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2024-06-27 - Read second time and amended. Re-referred to Com. on APPR. [AB2416 Detail]
Download: California-2023-AB2416-Amended.html
MAJORITY2/3
Appropriation:
NO
Fiscal Committee:
NOYES
Local Program:
NO
SECTION 1.
Bill Title: Residential property insurance: wildfire risk.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2024-06-27 - Read second time and amended. Re-referred to Com. on APPR. [AB2416 Detail]
Download: California-2023-AB2416-Amended.html
|
Amended
IN
Assembly
March 21, 2024 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 2416
| Introduced by Assembly Member Connolly |
February 13, 2024 |
An act to add Article 5 (commencing with Section 2095) to Chapter 2 of Part 1 of Division 2 of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2416, as amended, Connolly.
Insurance: residential Residential property insurance: wildfire risk.
Existing law generally regulates classes of insurance, including property and fire insurance. Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and prescribes the department’s powers and duties. Existing department regulations set forth requirements and limitations for a rating plan that segments, creates a rate differential, or surcharges the premium based on a policyholder’s or applicant’s wildfire risk.
Existing law, as enacted in the Insurance Rate Reduction and Reform Act of 1988, approved by the voters as Proposition 103 at the November 8, 1988, statewide general election, prohibits specified insurance rates from being approved or remaining in effect if they are excessive, inadequate, unfairly discriminatory, or
otherwise in violation of the act. The act requires an insurer that desires to change any rate to file a complete rate application with the commissioner that includes specified data. Existing law authorizes the provisions of Proposition 103 to be amended by a statute that furthers the purposes of the act and is enacted by the Legislature with a 2/3 vote.
This bill would require the department to require an admitted residential property insurer to use a rating plan that reflects, and the rate offered to an applicant or insured to be based in part on, the reduced wildfire risk resulting from the installation or use of a noncombustible construction material, as specified. Because the bill would affect the commissioner’s discretion with rate applications, the bill would amend Proposition 103.
Existing law creates the Department of Insurance, headed by the Insurance Commissioner, and prescribes the commissioner’s powers and duties. Existing law generally regulates classes of insurance, including residential property insurance. As it relates to wildfire risk, existing regulations of the department require an insurer’s rating plan to take into account certain wildfire mitigation efforts, including specified building hardening measures and clearing of vegetation.
This bill would state the intent of the Legislature to enact legislation requiring insurers offering residential property insurance in the state to provide discounted insurance rates to homeowners who use or install in their homes building materials that are demonstrated to harden homes and reduce wildfire risk.
Digest Key
Vote:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Article 5 (commencing with Section 2095) is added to Chapter 2 of Part 1 of Division 2 of the Insurance Code, to read:Article 5. Reduced Wildfire Risk
2095.
The Legislature finds and declares all of the following:(a) More than 2,000,000 California households, or approximately one in four residential structures in California, are located within or near “high” or “very high” fire hazard severity zones. These households are particularly vulnerable to increasingly catastrophic wildfires that pose urgent threats to lives, property, and resources in California.
(b) The state has invested nearly three billion dollars ($3,000,000,000) since the Budget Act of 2019 into programs and projects to improve forest health and resilience, create fuel breaks, harden homes and communities, and build resilient lifeline infrastructure to withstand wildfire disasters when
they do occur.
(c) Chapter 391 of the Statutes of 2019, which created the California Wildfire Mitigation Program jointly administered by the Office of Emergency Services and the Department of Forestry and Fire Protection, recognized that “California must develop statewide options to encourage cost-effective structure hardening to create fire resistant homes, businesses, and public buildings within wildfire hazard areas and with a focus on vulnerable communities.”
(d) State support for home hardening incentive programs is especially critical now. California residents are finding homeowners’ insurance in very high risk fire areas to be increasingly difficult and costly to obtain, if coverage is even available. The Department of Insurance determined that the majority of nonrenewals, refusals to insure, and increased premiums resulted from insurers’ use of wildfire risk models that do
not account for wildfire risk reduction or home hardening measures completed by the homeowner or community.
(e) On September 21, 2023, Governor Newsom issued Executive Order No. N-13-23 asking the Insurance Commissioner to take “prompt regulatory action to strengthen and stabilize California’s marketplace for homeowners insurance and commercial property insurance,” including maintaining “the long-term availability of homeowners and commercial property insurance coverage.”
(f) Expanding the Department of Insurance’s Safer from Wildfire regulations will advance these goals. The Safer from Wildfire regulations incentivize homeowners to invest in specified wildfire risk reduction and home hardening measures by requiring admitted insurers to reflect and take into account these measures in their ratings plans. The voluntary home hardening measures included in the Safer from Wildfire
regulations provide a higher level of fire protection than what is otherwise required by state law and help contain the spread of wildfires, reduce property damage, save lives, and encourage insurance companies to remain committed to the California insurance market.
(g) It is the intent of the Legislature to further incentivize homeowners to invest in demonstrably effective home hardening measures by requiring the Department of Insurance to expand its Safer from Wildfire regulations to require admitted insurers to take into account in their ratings plans the installation or use by a homeowner in their home of specified noncombustible construction materials included on the Office of the State Fire Marshal’s Building Materials Listing. Additional benefits of noncombustible materials include increased energy conservation and alignment with the existing California Building Standards Code (Title 24 of the California Code of Regulations) and
anticipated updates to the code that will strengthen thermal resistance and heat transfer requirements for building materials.
(1) The Building Materials Listing includes construction materials that have been tested and analyzed to confirm the materials meet established performance and reliability features by a laboratory accredited by the Office of State Fire Marshal.
(A) Insulation products identified on the Building Materials Listing in SFM Listing Category 2440 have been tested in accordance with either ASTM International Standard (ASTM) E84 or Underwriters Laboratories, Inc. Standard 723 UL (Standard Test Methods for Surface Burning Characteristics of Building Materials) for flame spread and smoke development, and have a flame spread rating of 0–25 and a smoke developed index of 0–450, also defined as a Class A rating. In addition, select products identified in Category 2440
have been tested for noncombustibility in accordance with ASTM E136 (Standard Test Method for Assessing Combustibility of Materials Using a Vertical Tube Furnace at 750 degrees Celsius) and have achieved a passing result.
(B) Exterior wall siding and sheathing for Wildland Urban Interface fire areas identified on the Building Materials Listing in SFM Listing Category 8140 comply with Chapter 7A of the California Building Standards Code and have been tested in accordance with State Fire Marshal Standard 12-7A-1, achieving a passing result. Standard 12-7A-1 evaluates the ability of an exterior wall assembly to resist fire penetration from an exterior fire exposure and consists of a 150 kilowatt intensity direct flame exposed to the exterior surface of the assembly for a 10-minute duration.
(C) Non-wood roof covering/assemblies for wildland urban interface fire areas identified on
the Building Materials Listing (SFM Listing Category 8180) comply with Chapter 7A of the California Building Standards Code and have been tested in accordance with ASTM E108. ASTM E108 is a fire-test-response standard used to measure the relative fire characteristics of roof coverings, as part of a complete roof assembly, when exposed to external fire sources. It evaluates the spread of flame across the roof covering when exposed to direct flame impingement and classifies the covering by class, with Class A being the highest achievable class.
(2) Noncombustible construction materials, as defined by the California Building Standards Code, provide the highest level of fire safety among materials identified on the Building Materials Listing because they do not ignite, even when exposed to high temperatures for extended periods of time. Use of noncombustible construction materials is an effective means of reducing fire-related property damage and
the contribution of structures to the spread of wildfires.
2096.
For purposes of this article:(1) “Building being evaluated” has the same meaning as set forth in Section 2644.9 of Title 10 of the California Code of Regulations.
(2) “Building Materials Listing” means the list of construction materials and equipment biennially prepared by the Office of the State Fire Marshal pursuant to Section 13144.1 of the Health and Safety Code as part of the Office of State Fire Marshal’s Building Materials Listing Program.
(3) “Noncombustible” has the same meaning as set forth in Section 202 of Title 24 of the California Code of Regulations.
(4) “Safer from Wildfire regulations” means the regulations set forth in Section 2644.9 of Title 10 of California Code of Regulations.
2097.
As part of its Safer from Wildfire regulations, the department shall require an admitted insurer that offers residential property insurance in the state to use a rating plan that reflects, and the rate offered to an applicant or insured to be based in part on, the building being evaluated’s reduced wildfire risk resulting from the installation or use of a noncombustible construction material approved by the Office of the State Fire Marshal and included on the Building Materials Listing in any of the following categories:(a) Insulation (SFM Listing Category 2440).
(b) Exterior Wall Siding and Sheathing for Wildland Urban Interface (SFM Listing Category 8140).
(c) Non-Wood Roof Covering/Assemblies for Wildland Urban Interface (SFM Listing Category 8180).
It is the intent of the Legislature to enact legislation to require insurers offering residential property insurance in the state to provide discounted insurance rates to homeowners who use or install in their homes building materials that are demonstrated to harden homes and reduce wildfire risk.
