Residential property insurance: high fire risk areas: study.

The Insurance Rate Reduction and Reform Act of 1988, an initiative measure enacted by Proposition 103, as approved by the voters at the November 8, 1988, statewide general election, prohibits specified insurance rates from being approved or remaining in effect that are excessive, inadequate, unfairly discriminatory, or otherwise in violation of the act. The act requires an insurer that wishes to change a rate to file a complete rate application with the Insurance Commissioner, as specified. This bill would require the commissioner to investigate, study, and prepare a report that addresses specific issues relating to ratemaking for residential property insurance policies in high fire risk areas. The bill would require the study to address the extent to which the commissioner may use its authority to create one or more market assistance plans to ensure that residential property insurance is fair, available, and affordable in high fire risk communities, the costs and benefits of authorizing insurers to include the cost of reinsurance as part of the rate for residential property insurance, and the extent to which the establishment of a public wildfire catastrophe model would be appropriate for use in residential property insurance ratemaking. The bill would require the commissioner, on or before July 1, 2022, to submit the report to the Chairpersons of the Assembly and Senate Committees on Insurance, the Speaker of the Assembly, the President pro Tempore of the Senate, and the Governor. The bill would repeal these provisions on January 1, 2025.