Insurance Regulatory Report: November 2021

The following regulatory information may be of interest to attorneys practicing insurance law. 

This information is current as of October 19, 2021.  Additional information about any of the below proposals may be obtained by clicking here.

Wildfire Moratoriums

On September 20, 2021 and October 1, 2021, respectively, the CDI issued Bulletin 2021-06 and Bulletin 2021-07 identifying the ZIP codes to which the Cal. Ins. Code § 675.1(b)(1) residential property non-renewal moratorium applies as a result of wildfires. 

For reference, the text of Cal. Ins. Code § 675.1(b) states that:

An insurer shall not cancel or refuse to renew a policy of residential property insurance for a property located in any ZIP Code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency, as defined in Section 8558 of the Government Code, based solely on the fact that the insured structure is located in an area in which a wildfire has occurred. This prohibition applies to all policies of residential property insurance in effect at the time of the declared emergency.

Prenotice Discussion on Mitigation in Rating Plans and Wildfire Risk Models

On October 11, 2021, the CDI issued an invitation to a prenotice public discussion on mitigation in rating plans and wildfire risk models (REG-2020-00015).  The discussion had been postponed from early 2021 and is now scheduled for 1:00 p.m. on November 10, 2021 over Zoom.  The CDI has been working on draft regulations addressing the use of models with respect to wildfire risk and is seeking alternatives to the contemplated draft that would achieve similar benefits, which the CDI identifies as follows:

• Incentivizing individual and community mitigation efforts by requiring consideration of property- and community-level mitigation against wildfire risk;
• Reducing the risk of loss posed by wildfires;
• Improving accuracy in the classification of wildfire risk and the resulting rates and premiums;
• Increasing transparency in, and consumer awareness of, insurers’ rating and/or scoring of wildfire risk;
• Enhancing consumer protection by establishing a consumer appeals process;
• Reducing unfair discrimination by enhancing consistency in insurers’ wildfire rating practices and/or risk scoring practices; and,
• Potentially improving availability and affordability of property-casualty insurance for communities and properties where wildfire mitigation measures have been implemented

Written and oral comments are invited, and the CDI requests analysis and supporting information on the economic impact of suggested alternatives.

Export List

On October 12, 2021, the CDI issued a pre-hearing notice with respect to the export list for surplus line placements.  Coverages included on the list are considered generally unavailable in the admitted market may be placed in the surplus line market without a diligent search of the admitted market.  The date and time of the hearing, which will be virtual, is not specified and will be provided in the Notice of Hearing to be subsequently issued.  The notice seeks recommendations from interested parties regarding the modification, addition or deletion of any export list coverage. 

This e-Bulletin was prepared by Nicole Zayac, Of Counsel in the San Francisco office of DLA Piper LLP (US). Ms. Zayac is the Chair of the Insurance Law Standing Committee of the Business Law Section of the California Lawyers Association.