Jessica On The Issues

The Crisis Facing Families in CA-03

The cost of fire insurance is untenable for so many Californians, and the market is fundamentally broken. Throughout California’s Third District, families are blindsided by policy cancellations and skyrocketing rates. Many homeowners, even those diligently maintaining defensible space, have seen their insurance costs more than double or have lost insurance all together. This burden not only impacts individual households but also contributes to local inflation, driving up costs for small businesses.

Fixing Our Broken Insurance Market

To stabilize the home fire insurance market and lower costs, we need substantial reform in how insurance operates in the face of climate change. Insurance companies must transition into being active drivers for risk reduction rather than passive bystanders who just increase prices in the face of increased risk.

California’s insurance rates are increasing for two reasons: The real risk of fire has increased over the previous decade and the rising cost of reinsurance. Reinsurance is a secondary insurance market that covers extreme losses for insurance companies.  Reinsurance rates have skyrocketed because extreme losses have increased due to global climate catastrophes such as hurricanes, floods and tornadoes.  

Incentivize Insurance Companies to Participate in Risk Reduction:

In Congress, I will drive a new program that incentivizes insurance companies to invest in fire adaptations in and around the communities they insure. This will create a new driver of real risk reduction in the wildfire space.

I will advocate for a partnership where the federal government offers reduced reinsurance to insurance companies on the condition that they invest in fire adaptations for those they insure. This would include measures such as home hardening, creating defensible space, and establishing strategic fuel breaks. Rather than paying exorbitant rates into the corporate reinsurance markets, insurance companies would invest that money into wildfire risk reductions for communities. The result would be a collaborative effort where both insurers and the insured work together to reduce risks, ultimately leading to more stable insurance premiums.

This approach also ensures quicker implementation of necessary adaptations, reducing overall risk and stabilizing insurance markets, making California communities safer and more affordable.