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Lara to boost wildfire insurance coverage

Issue Date: October 20, 2021
By Kevin Hecteman
Insurance Commissioner Ricardo Lara, second from left, visited Santa Paula last week in the latest of a series of meetings with farmers and ranchers about difficulties obtaining insurance. With him are John Krist, left, CEO of the Farm Bureau of Ventura County; Jamie Johansson, second from right, president of the California Farm Bureau; and Ted Grether, right, president of the Farm Bureau of Ventura County.
Photo/Corrin Armstrong

California Insurance Commissioner Ricardo Lara is implementing a series of changes to help farmers and ranchers struggling to insure their properties after several years of devastating wildfires.

Lara said he will boost the coverage limit of the state's insurer of last resort and impose new rules requiring insurance companies to take into account fire-mitigation efforts when writing policies.

Lara made the announcement Oct. 12 in another in a series of meetings the insurance commissioner has held with California Farm Bureau members. The latest meeting took place in Ventura County, where the Thomas Fire broke out in December 2017.

"With a tighter insurance market due to wildfire risks, many farmers and vintners need more coverage than they can currently get," Lara told the Ventura County gathering.

John Krist, chief executive of the Farm Bureau of Ventura County, said the issue resonates among his members, including those who shared their stories with Lara.

"A lot of growers in Ventura County have had bad experiences with their insurers, particularly over the last four years since the Thomas Fire—lots of nonrenewals, lots of rate increases, shrinking coverage for the same cost," Krist said. "The commissioner heard some really heartfelt stories from people about the losses they suffered, the difficulty they had negotiating settlements with their insurance companies, and then getting canceled and having to scramble to find coverage. He was very sympathetic but had some concrete steps to offer to make the situation better."

A first step came from the Legislature with Senate Bill 11, signed in late July. It added farm structures to the list of commercial properties eligible for coverage under the California FAIR Plan. FAIR, or Fair Access to Insurance Requirements, serves as an insurer of last resort.

The next steps came last week, when Lara directed the FAIR Plan's limits be raised to account for inflation.

At present, the FAIR Plan's limit for commercial properties is $4.5 million, a cap that has not been raised since at least 1997, according to the Department of Insurance. The limit under the FAIR Plan's Businessowner's Policy is $3.6 million, which hasn't changed since at least 1994.

Lara's order will boost the commercial-property limit to $8.4 million and the business-owner policy limit to $7.2 million.

California Farm Bureau President Jamie Johansson praised Lara's actions.

"This isn't just talk," Johansson said. "It's moving forward with conviction to address the challenges facing agriculture and collaborating on solutions. This action plan comes out of his meetings across the state where he has heard directly from our members. He sees the problems clearly, and he is working with the California Farm Bureau to address them."

Brent Burchett, executive director of the San Luis Obispo County Farm Bureau, called the moves "a step in the right direction."

"Is that going to be enough coverage for everyone? Absolutely not," Burchett said. "You can be a small or medium-size winery and have damage. If you lost everything in a fire, that would exceed that amount. But we're happy this FAIR Plan is at least being reformed to make it a more viable option for all of our members."

Ryan Klobas, chief executive of the Napa County Farm Bureau, welcomed the changes. His county hosted the first roundtable in May, at a fire-damaged winery in St. Helena.

"I think Commissioner Lara understands the impact that this has had in Napa County and the loss that we've experienced due to wildfire," Klobas said.

Chad Peakes, a Ventura insurance agent whose company handles Nationwide policies, noted that Nationwide has a "difference in conditions" plan for farmers and ranchers seeking coverage.

"It's basically writing the farm-package policy for them but removing fire coverage," Peakes said. "You get the fire coverage from writing the FAIR Plan policy."

Peakes said that when seeking coverage for a client, "we're hoping Nationwide is going to come back with the difference in conditions. Then we go to the FAIR Plan and quote the buildings that we can quote with them."

County Farm Bureau leaders said more work needs to be done.

"The increased availability of the FAIR Plan and the increased limits on coverage help, but that's really not where people want to be," Krist said. "I think what we need is for the private insurance market to do a better job of evaluating risks on a property-by-property basis and not just issuing blanket-policy nonrenewals for every property that's within whatever mile of something that might burn."

Klobas pointed to the working group Lara is putting together to address mitigation measures. A virtual workshop will take place at 1 p.m. Nov. 10.

"This working group is supposed to look at mitigation practices, hardening measures, and it will absolutely provide an incentive for businesses and residents to employ those practices if they're going to be factored into the insurance policy that ultimately gets written to cover their property," Klobas said.

"The fact that vineyards act as a firebreak is starting to be taken seriously now," Klobas added. "It's important for us to remain involved in these discussions."

Burchett called the issue "a clear example of where California Farm Bureau has been a leader," noting that a similar roundtable was held in Paso Robles in June.

"In our meeting with Ricardo Lara, we had cattle ranchers, we had vegetable producers, we had wineries, other commercial ag operations," Burchett said, adding this "showcases why we have a Farm Bureau—these types of issues that cut across agriculture."

(Kevin Hecteman is an assistant editor of Ag Alert. He may be contacted at khecteman@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.




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