An Update from the Wildfire Insurance Task Force


If you’re wondering what CAI-CLAC’s Wildfi re Insurance Task Force has been up to over the last two years, here is a summary of our efforts on behalf of California community associations and where we currently stand.


The Wildfi re Insurance Task Force of CAI’s California Legislative Action Committee has been actively advocating to state legislators, the California Department of Insurance (CDI), and the California FAIR Plan (CFP) that urgent change is needed to address the wildfi re insurance crisis, specifi cally with respect to California community associations.


Here is an overview of our efforts and the hurdles we’ve encountered – which will partially explain why change has been so slow and may yet take some time:


We began by educating the various parties that community associations purchase commercial


insurance – as virtually all past efforts of state-level agencies (like the California Department of Insurance and the California FAIR Plan) have been focused solely on individual homeowners’ policies (personal/homeowner’s insurance). While these are important and appreciated, more is needed to provide relief to the 14 million+ California homeowners who live in associations. The CDI has acknowledged this distinction and is now aware of it, but we need to continue to educate our legislators about this nuance, because many of the draft bills we see are still focused exclusively on personal/homeowner’s insurance.


The CFP was created to be a “market of last resort” for home and business owners unable to obtain insurance elsewhere, but the program’s lack of transparency, clarity, and


8 July | August 2023


coverage options for community associations (which do not fall neatly into either the “home” or “business” category) are hindering that mission when it comes to common interest The Task Force testifi ed about this at a hearing in July 2022 and submitted detailed, technical suggestions at that time regarding how these issues could be improved by the CFP.


We’re all aware that the catastrophic nature of the wildfi re peril has caused a mass exodus of insurers


from the marketplace; very few companies remain available to write ANY coverage in California’s wildfi re-exposed areas. Similar to hurricanes, fl oods, and earthquakes, wildfi re has become a cause of loss, which the standard insurance market is unable to adequately underwrite or price. However, current regulation prohibits standard insurers from excluding wildfi re or even applying different deductibles, limits, or other terms or conditions to coverage for that peril. We do not even have a standardized defi nition of “wildfi re” in the insurance industry at this time. (A member of the Task Force addressed the Insurance Services Offi ce (ISO) about this at their annual conference in early November, but they are unwilling to move forward on it until there is a reasonable pathway cleared with regulators for it to be useful.)


Insurance companies are subject to strict solvency regulations, and if they are (a) unable to obtain an adequate premium for the catastrophic loss potential associated with wildfi re, and


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