California Considers Insuring Itself Against Disasters
A California Assembly committee on June 26 cleared legislation to allow the state to take out an insurance policy to protect itself from emergency response costs stemming from wildfires and other unexpected disasters.
“With extreme wildfires driving up the cost of firefighting to protect communities, disaster insurance will leave California in better financial shape,” said California Insurance Commissioner Ricardo Lara. “Having insurance for our state budget can help us better prepare before the next disaster strikes.”
Senate Bill 290 calls for the creation of California Disaster Insurance, which would function like a statewide home insurance policy. Premiums would be paid by a portion of existing emergency funds, and the policy would trigger a payment to the state in the event of a disaster.
The action “brings us one step closer to giving the governor, myself, and the insurance commissioner the ability to purchase insurance, reinsurance, insurance-linked securities, and other alternative risk transfer products to help pay costs resulting from natural disasters,” said California Treasurer Fiona Ma. “It makes good financial sense to do this.”