San Bernardino Sought Emergency Action on Home Insurance Months Before Fire

Months before a devastating wildfire burned through thousands of acres in Southern California, San Bernardino County supervisors had asked the state's authorities to stabilize its struggling homeowner insurance sector and stop companies from cutting coverage.

Now, with the Line Fire still burning uncontrolled as of early Monday, the homeowner insurance crisis in the fire-prone region is likely to get worse.

"Wildfires like the San Bernardino County Line Fire could cause insurers to reevaluate the risk of insuring in that area and potentially stop writing new policies, as we've seen insurers like Allstate and State Farm do over the past several years," Cassie Sheets, an expert at Insurify, told Newsweek.

"The California Department of Insurance has historically been slow to approve rate increases and has mitigated some of the hikes Californians would otherwise face now, but the DOI approved a 34 percent home insurance increase for Allstate this year," she added. "As the DOI balances consumer protections with the health of the state's insurance market, consumers may see more premium hikes to keep insurers solvent and operating in the state."

The fire began burning at the base of the San Bernardino Mountains on Thursday and quickly grew to several times its original size in the following days, fueled by high temperatures, dry conditions and strong winds.

As of Sunday night, the blaze was burning through 20,553 acres across San Bernardino County and was 0 percent contained, according to the Department of Forestry and Fire Protection.

As the fire is still to be contained, it is too early to assess the damage. As of now, authorities have reported three injuries confirmed among firefighters.

Thousands of people have been evacuated from their homes in the county and authorities reported that 36,328 structures were threatened by the blaze on Sunday night, including single- and multi-family homes.

"Accurately guessing the damages the fire will cause is extremely difficult, but it is notable that 35,000 buildings are at risk," Sheets said. "A fire in a more densely populated area is going to cause a lot more insured losses than one in a very remote location. As the risk of wildfires and the cost of rebuilding has increased, we have seen insurers struggling to stay profitable in high-risk areas. Insurance companies also have insurance, called reinsurance, and reinsurers are raising rates too."

The increasing risk of raging fires like the one now burning in San Bernardino County is what drove some major insurers to cut coverage in California, especially as strict regulations limit the companies' ability to increase premiums as much as they would like. Farmers Insurance, State Farm and Allstate all recently decided to limit business in the Golden State.

A growing lack of options for coverage has left many Californians scrambling and having to rely on the California Fair Access to Insurance Requirements (FAIR) Plan, a state-established risk pool acting as California's insurer of last resort which provides basic fire coverage for those who cannot find it on the traditional market.

The coverage offered by the FAIR plan is thought to be only a temporary solution—but the size of the insurer of last resort has exploded in the past few years. In 2024, the FAIR Plan held more than 350,000 policies—too many to be sustainable for the program.

This is why, in late June, the San Bernardino County's Board of Supervisors unanimously voted to ask California Insurance Commissioner Ricardo Lara, Governor Gavin Newsom and the state Legislature to declare a statewide state of emergency over homeowner insurance. The board urged them to "take immediate emergency regulatory and legislative action to strengthen and stabilize California's marketplace" for homeowners insurance.

In a statement released at the time, the board's chairman and 3rd District supervisor, Dawn Rowe, said that the reduction of insurance options in the state was having "a direct negative impact on our consumers' ability to get coverage" and was putting "homeowners and businesses at risk of catastrophic loss."

In response to the board's request, Lara said that his department was moving "with all deliberate speed" to introduce reforms that would stabilize and improve the market but warned against "overregulation that will ultimately harm consumers."

The commissioner said that by the end of the year, the insurance commissioner's department would complete "several regulations, administrative actions and open public meetings to transform our state's insurance marketplace that results in more insurance companies returning and expanding in all areas of our state."

However, San Bernardino County's Board of Supervisors is concerned that it would take too long for the reforms to have an impact on the state's market.

"The Line Fire demonstrates exactly why the California property insurance marketplace is in crisis and needs emergency reform," Rowe told Newsweek. "Many of my constituents under evacuation orders and warnings have been dropped by their longtime insurance carriers after paying their premiums for decades without submitting a claim," she added.

"I am incredibly grateful for the fire agencies and emergency responders who are putting their lives on the line to protect our communities."

Newsweek contacted the California Department of Insurance, San Bernardino County, Insurance Information Institute and Insurify for comment by email on Monday morning.

Update 9/9/24, 11:20 a.m. ET: This article was updated to include a comment from Cassie Sheets of Insurify

Update 9/9/24, 2:00 p.m. ET: This article was updated to include a comment from Dawn Rowe.