Hey, California: Stop Encouraging Building In Fire Zones!

The so-called camp fire in Butte County, California, has led to the deaths of 85 people and destroyed 13,972 homes, making it the deadliest wildfire in the state’s history. Sadly, California law makes it likely that another fire will soon claim that dubious distinction.

- Christian Britschgi

Thanks to the state’s funky way of regulating insurance, residents in fire-prone areas have little reason to move out of harm’s way after the last ember has cooled, says Ray Lehmann, an insurance policy expert at the R Street Institute. “California makes it really difficult for the market to do what it would normally do in these cases, which is when assessments of risk go up, insurance rates go up, and a place becomes less attractive to build there,” he says.

As with many of California’s problems, its dysfunctional insurance market can be traced back to a decades-old ballot initiative. Passed in 1988, Proposition 103 expanded the mandate of the insurance commissioner, who is responsible for approving rate increases. The law also allows for extensive public input on any proposed rate hike. As a result, insurers are slower to respond to risk and less able to write policies that discount fire-safe practices on an individual basis—say, by charging less for having a stone porch instead of a flammable wood one.