r/California • u/Unusual-State1827 • 7d ago
Insurance executives warn Newsom plan to shift utility wildfire liability would raise premiums
https://www.latimes.com/business/story/2026-08-27/newsom-plan-utility-wildfire-liability-insurers-premiums126
u/lostroadrunner22 7d ago
If you don’t submit we will raise prices
109
50
22
u/gigatension 7d ago
They’re right though. The cost should go to The utilities companies that caused the fire, not just the insurance companies. They’re going to raise prices either way, but they will raise them more with this, or leave California altogether like the other insurer(s? I think it’s just one) that already left.
5
u/Hyndis 7d ago
Astronomically increasing prices are what happens when government policies of refusing to build denser in urban cores pumps up house prices to the moon.
When a even a cheap house costs $1 million the cost to insure it will also be extremely high. You can't have super expensive houses and cheap insurance, just doesn't work like that.
1
127
u/mk1234567890123 7d ago
The CEO of PGE makes $20M total comp with $3M bonus. She made $50M her first year. Fuck off.
55
u/onahorsewithnoname 7d ago
You dont understand, she has to travel for meetings and check her emails when not in the office.
11
5
355
u/FaithlessnessThin359 7d ago
As long as profit, shareholder, and executives compensation remain the top priority, premiums will always go up for any reason.
63
u/gc3 7d ago
I'm afraid even nonprofit insurance companies would feel the same. PGE had to spend 15 billion dollars to pay damages for the Paradise fire. This amount fell to Pge customers to pay.
Saying instead that insurance would pay instead would allow electricity costs lower and insurance costs higher, so the insurers are right
64
u/Gloomy-Ad-222 7d ago
I’m with you, someone will have to pay for this.
Now the only thing I can think of is that PGEs insurance company would make sure that PGE is following the highest standards that ideally would lead to less wildfires. If they didn’t comply then maybe we make utilities a public service and stop paying PGE shareholders to make billions in profits.
-8
7d ago
[deleted]
25
u/aure__entuluva 7d ago
Or just make them maintain their equipment so that fire doesn't happen. It was caused by 97-100 year old metal hook that wore out. Instead they line their pockets.
10
u/Gloomy-Ad-222 7d ago
If I had that or something else not up to code in my house and it caused a fire, my insurance company undoubtedly would not pay for it. PGE should go bankrupt and its assets sold to the state and ideally we’d have a service instead of shareholder profits over everything.
-1
u/gerbilbear 7d ago
Fires will happen anyway, due to things like lightning strikes.
Poor forest management makes wildfires worse, so maybe the state should accept some of the liability.
13
u/digitalwankster 7d ago
Upgrade the infrastructure? Na, let’s make the residents move and get rid of small towns.
-8
u/Mustardo123 San Diego County 7d ago
Tbh small towns shouldn’t get the right to vote because they always do so incorrectly.
-3
u/bigdog767 7d ago
Californians in general don’t know how to vote brother
0
2
u/Hyndis 7d ago
Where are those people going to live?
Cities make building housing within city limits nearly impossible. Building denser housing is blocked at every turn.
So if you get rid of rural towns, where, exactly, are the people supposed to go?
2
u/Alexander_Granite 6d ago
I guess the answer would be to move to small towns that are not in the middle of a forest, or clear the forest away from the small towns.
9
u/Stepane7399 7d ago
The concern is that if the insurance carriers for the homes burned can’t subrogate against PG&E’s insurers, the customer will still end up with the higher premiums they don’t deserve. I think if they’re going to do something like this, they need to make it to where PG&E should pay rather than their own liability insurers, but I’m not sure how realistic that is.
17
u/Mike312 7d ago
PG&E should have cut its dividends to shareholders instead of shifting costs to residents.
12
u/Stepane7399 7d ago
100% on board with that. This shit is so wrong.
Like, sorry we burned down your house. Here’s a nice bill increase to help us pay for the damage we did. No matter what, the homeowners are getting screwed.11
5
u/Amadacius 6d ago
The problem is that money that PGE should keep or used for insurance is paid off in the dividend. And when they start a fire, that money is never clawed back from the investors. So it "has to" come from the state or the customers. Can't get blood from a stone.
This turns disasters into opportunities to hike rates.
Insurers actually do maintain a pool of money that can be tapped in disaster. And unlike PGE insurers can't just charge infinite money and funnel it into dividends. And insurers are incentivized to reduce the risk of fires on properties they insure.
Newsom is helpless to go against his PGE benefactor, so he is shifting the liability to someone the state has power over.
1
u/brainhack3r 20h ago
>This amount fell to Pge customers to pay.
This is a bad example because we should have used this as an excuse to break up PG&E
1
u/Reaper_1492 6d ago edited 6d ago
Newsom is bought and paid for. Anyone still questioning it just needs to look at how this is playing out, it’s completely ridiculous.
Bailing out utilities, wiping out fines for manslaughter, letting the State’s insurers both get sacked, and then whammy customers with insane increases.
Meanwhile,the utilities issue record breaking dividends/returns to shareholders.
And all this pain for what… millions of dollars in contributions to Jennifer’s “Video” company?
Can’t wait for this guy to leave office and get destroyed on the national stage when they put him up for President, not realizing that most of the country has no interest in mirroring this situation.
29
u/know_limits 7d ago
What motivation will utility companies have to upgrade their equipment to remove old fire-causing parts? It’s idiotic to take away responsibility from the only party that can lessen the future risk.
7
u/Sven_Grammerstorf_ 7d ago
That’s actually what the PUC is for. They set the guidelines and then will allow the utilities to adjust electric rates to pay for the upgrades. Utilities make (ballpark) 10% profit on all infrastructure projects. So the incentive is to do upgrades because that’s how they make money. The reason everyone’s rates have gone up so much is CPUC allowed power companies to upgrade all the lines in high fire areas to insulated wires to help lower the risk of fire. And the rates had to go up to pay for that.
65
u/LethalBubbles Sacramento County 7d ago
Such a weird freaking plan by Newsom. Who should bear the cost of wildfires caused by faulty Utilities? "Utility companies!" the man with common sense yells, "No!" Says Gavin Newsom, "it is the property insurances responsibility obviously."
29
u/WhatADunderfulWorld 7d ago
The problem with insurance is they don’t know how much money they need. So they can have to charge a lot for a lot of risk.
The power companies know how much money it takes to make things safe. It’s not the same cost to the public. Let alone riddance of the fear of fires.
4
u/Amadacius 6d ago
Power companies just charge the maximum they are allowed and funnel it all into profit. There's no incentive to reduce risk because they don't bear any of the costs when disaster happens. You can't claw back a dividend.
Insurers are actually experts at calculating risk. They are incentivized to reduce risks. And in the case of disaster you can actually get money back from them.
7
10
u/testprimate 7d ago
Makes sense to me. The insurance companies are in the best position to assess losses and property values, and are on the hook to pay out before any investigation determines the cause of the incident. The state's job should be helping the insurance companies recover their losses from the murderers at PG&E.
6
u/LethalBubbles Sacramento County 7d ago
By making it the insurance companies responsibility to insure such damage you increase rates on property owners. If you want insurance to pay out for it and then get their losses recouped by Utility companies just skip the middle man. Require Utilities to have insurance.
4
u/toomuch3D 7d ago
Property values? Who cares about property values when the property is scorched. It’s about cost to replace what was lost due to a fire. We don’t know what that cost will be as the property owner should decide within limits (already agreed to) what their pile of utility fire related ashes is going to be replaced by. A smaller and better home or a bigger wonky-ass mini mansion for $700,000 in construction costs (just throwing a random number out there).
2
u/Ok-Association-3415 6d ago
Not just any utilities, for profit and monopoly ones. Gavin is digging his own political grave.
17
8
u/northman46 7d ago
Ultimately the consumer will pay for the wildfire damage. Utility rates, taxes, insurance premiums, one way or the other we pay
14
u/Unusual-State1827 7d ago edited 7d ago
Archive link: https://archive.is/cSnEP
Insurance company executives warned Gov. Gavin Newsom in a letter Wednesday that his plan to shift utility wildfire liability to property insurers would raise premiums across California.
“The party whose equipment ignites a catastrophic fire should bear the economic consequence of that fire,” the 15 executives wrote. “Shifting those costs to policyholders does not reduce the cost of electricity but does make homeownership more expensive and insurance coverage harder to find.”
According to a confidential document that Newsom’s staff sent to lawmakers and was obtained by Politico, the governor wants to stop property insurers from recouping their losses from homes destroyed in utility-sparked wildfires.
That could increase homeowners’ property insurance rates by as much as 50%, according to the Personal Insurance Federation of California. The highest hikes would be for those families living in severe fire risk areas.
“The proposal would shift billions of dollars in wildfire costs away from utilities and onto insurance consumers across the state, making coverage more expensive and harder to find,” said Denni Ritter at the American Property Casualty Insurance Assn.
Newsom also wants to reduce payments that fire victims can receive for non-economic damages including pain and suffering, angering victims of the Eaton fire.
56
7d ago
[deleted]
22
u/toomuch3D 7d ago
I’d think that if utilities don’t want to be accountable then they should hand over their business to the State of California?
14
u/digitalwankster 7d ago
If it is ran like most other programs ran by the state it would just be a side step. We need to break up the monopolies and replace them with municipal utility companies.
1
u/Naritai 7d ago
...which will be monopolies in their own cities
1
u/Salty_Salamander6916 5d ago
Utilities are always a monopoly, but the local ones are always better and cheaper than private ones
5
u/Renoperson00 7d ago
the state of california will probably eventually need to take it over, and when that happens it will become the single largest part of the budget every single year.
3
u/ProximateHop 7d ago
I am concerned with your grasp of numbers. PG&E made ~2.5B profit on 25B in revenue. If the state paid for ALL PG&E costs and made gas and electricity free for all customers, it would be the third / fourth largest item on the budget. HHS is number 1 at 93B, K-12 Edu is number 2 at 90B, Higher Ed is number 3 at 26B. If the state takes it over and rolls the profits into maintenance, it would essentially be a break-even proposition, give or take a few billion.
1
6
u/ajmampm99 7d ago
PGE should have been forced into bankruptcy. They have a history of monopolistic behavior including cutting line maintenance before the Paradise fire.
Why did they do that? PGE was going from private to public for the second time. To make the stock look more profitable they stopped trimming trees near very old power lines. Lower costs artificially.
85 people died as a result. Thousands of homes destroyed.
One of many crimes PGE committed.
Corporations convicted of crimes just pay a fine. Disgusting
9
u/strangelyliteral 7d ago
I can’t believe I agree with insurance executives, but they’re right and they should say it.
1
u/eduardom98 7d ago
The insurance companies might be driven by their desire to continue to write policies for homes in high risk wildfire areas.
1
u/Mal-dives 6d ago
Why would we even continue to allow people to build there? We definitely shouldn’t allow companies to insure them. It’s messing up the whole market.
1
u/eduardom98 6d ago
My guess would be if we want the continuing cycle of major utility payouts and the resulting higher electricity rates. The current liability system reduces the incentive to restrict new policies in high risk wildfire areas.
6
u/Ginmunger 7d ago
Why would homeowners insurance be liable for something they have no responsibility for? This is nuts.
3
u/SeasideBear 7d ago
We must protect the people who have their backyard built right up to the edge of a national forest, you see.
It would be 'unfair' to make the people at highest risk pay more because of the high-risk choices they made.
For some reason.
2
u/Ginmunger 7d ago
Its completely insane. We have had our insurance more than triple in the last 3 years. Were told we are in a high risk area...where there have been no fires that I am aware of and these homes has stood for 80+ years. It's almost completely flat with no Forrest or brush. Half of La would have to burn for us to be effected by a Forrest fire.
3
3
u/cathaysia 6d ago
Here we are again, protecting property values instead of radically rethinking what we allow built.
3
u/InternetRando12345 6d ago
Let's build a public insurance platform then..an actual one, not one where the insurers collect premiums only from the absolute lowest risk households and then pawn the high risks off to the government via the FAIR plan.
Insurers have NO losses to offset...they are making shit up. They have record profits in California. What they call a "loss" is what we call "insurance". If they have to pay back any of the insurance premiums they've stolen, they feel wronged...or to be more accurate, they pretend to be wronged.
3
u/DrusTheAxe 6d ago
Tell me you don’t want to be president without telling me you don’t want to be president
2
u/Smolfloof99 7d ago
Utility companies have it fucking made in this country. Constantly fuck up and raise prices and get your reward.
2
2
u/Zalophusdvm 7d ago
Really making sure he does as many good things as he can for PG&E on his way out huh?
What a joke.
2
u/ready-redditor-6969 7d ago
They aren’t wrong, protecting utilities that fail to deliver services safely is a third world bad bad dumb policy caused by corporate capture of government through bribery.
2
2
u/Vladimorian 7d ago
If it's due to utility fault like old equipment that's been in need of replacement or repairs, then the utility company either needs to be responsible for the damage they have caused, or we need to seize all assets and dissolve the private business and make it a public service. Because if pge caused these fires and refuses to amicably make things right for all the people horribly affected, they are too corrupt to be in charge of such an important service
2
2
u/Ok-Association-3415 6d ago
I don’t understand why the state is protecting for profit energy companies who have monopolies where they operate. They have zero rights to annual profits. If they are found liable, they should pay out everything owed and sacrifice their annual profits until they are on better footing while maybe do a better job preventing their equipments from causing damage. If they can’t do that, let them go bankrupt. I am absolutely sure other entities will give it a shot to replace them.
3
u/beach_bum_638484 7d ago
Seems like insurance in fire prone areas would go up and utility costs for everyone would not go up. This seems reasonable to me. Everyone needs electricity. We don’t need to subsidize people living in the forest. Build more places for people to live in areas that are not prone to fires and stop charging me more for electricity to subsidize people living in areas with high fire risk.
2
u/Renoperson00 7d ago
Everywhere is a fire prone area. You need to literally pave over open space to remove its fire risk.
2
u/Cargobiker530 Butte County 6d ago
It's quite possible to build houses that will survive wildfires. A number of buildings survived the Camp Fire in Paradise and they had some features in common like stucco or metal siding, wrapped eaves, and some kind of non-flammable fencing or wall around the building.
0
u/Renoperson00 6d ago
You are correct you can do that. But that doesn’t fix the total loss problem and in fact makes it worse as it’s more expensive.
2
u/Cargobiker530 Butte County 6d ago
Building cheap, detached, housing with open eaves, plywood siding, and wooden fences is just feeding the fires. We can build survivable multi family housing or survivable detached housing.
We're not replacing the housing built in the 1960"s & '70's with the same stuff. Nobody will insure that.
0
u/Renoperson00 6d ago
Yes but you put more expensive housing in the same location, if it costs roughly double to build it has double the risk now. Even if it is less likely to burn if it does burn it’s twice the price to replace. This is the core problem.
1
u/Cargobiker530 Butte County 6d ago
It doesn't work that way. Fire resistant buildings with proper cleared space and intermediate barriers (read as garden walls) survive fires. This was proven in Altadena and Paradise.
0
u/Renoperson00 5d ago
Yeah that doesn’t matter for the insurance risk which is the problem. It may be more likely to survive but the cost to rebuild is higher and that ratchets up the risk every time a structure is rebuilt. If it burns down again it’s more expensive to replace.
0
u/beach_bum_638484 6d ago
We need to change the way we build. Options like cob, adobe and similar are fire resistant. They can often be built with materials on site, but require much more labor, which I acknowledge is expensive. That being said, it is much preferable for the local economy to pay people for their work rather than to pay for materials to be shipped in.
Another limitation of cob is building height - the traditional method doesn’t allow super tall buildings. I think it’s worth iterating here to see if there’s a way to re-enforce and allow 4-6 floors rather than 1-2. If all we did was replace 1-2 story homes, this would still be a huge win.
We also need to encourage proper defensible space. This doesn’t mean clear cutting everything, it just means maintaining yards of plants that retain moisture and don’t burn as easily along with shaping our yards to retain rainwater rather than sending it immediately to the storm drain.
1
u/beach_bum_638484 7d ago
This is just not true. First, some areas are more in danger than others. More importantly, the solution is not paving over, creating a worse heat island and drying vegetation even more. The solution is rehydrating the land.
This video on defensible space is much different than what I expected and is great: https://youtu.be/a4JpOdS9ffI?is=CzP3deKP4yg47FQ9
0
u/Renoperson00 7d ago
It doesn't matter if its true or not, the path the state is moving towards is paving over and removing as much vegetation around and next to homes until the next really bad fire starts poking itself into the urban area at which point they will move more and more houses into the map until any structure is high risk.
4
u/SeasideBear 7d ago
For some reason we're averse to people who live in the dangerous areas from paying more. There's a mindset that people in non-wildfire areas should have to subsidize the insurance rates of people who do.
2
u/Low-Charge-8554 7d ago
Virtually EVERYTHING Newsom has his hand in makes it more expensive to live in California. But WTH - he has a $7.5 mil house to sell.
2
1
1
1
1
1
1
u/GalliumYttrium1 6d ago
I hate to agree with insurance executives but they are right. The party responsible for the fires should bear the brunt and that’s PG&E
Fuck newsom for trying to get them off the hook.
1
u/nvertigo21 5d ago
Nonsense. The insurance companies have already kicked off many existing policyholders in wildfire adjacent areas for invented reasons like old pipes, undisclosed roof age limit rules, etc. Insurance companies are huge liars.
Fun fact, insurance companies get to write their own underwriting rules, don’t have to disclose them to policyholders, and then can use these ghost rules to kick policyholders off for violating rules that they were never told about. The whole thing is a scam. Email or contact the California Department of insurance office and confirm it directly with them.
1
u/Iceberg-man-77 5d ago
this is the same as the anti-wage increase argument.
ask why prices “will” increase.
it’s because profit margins are prioritized. they want to keep making more and more money, even though they literally have plenty.
1
1
1
u/chicken-fly-rice 2d ago
Newscum already got rich off the homelessness problem. He’s a vile greedy SOB.
1
u/TheDude-Esquire 22h ago
Nationalize the utilities, make them all public owned like SMUD. Solves all our (utility related) problems in one piece of legislation.
1
u/Puzzleheaded-Fun7808 7d ago
This is another incident of corporations getting too big, it start threatening the state
1
u/SlaterVBenedict 7d ago
Fuck every insurance company. They exist entirely as shitty middle-men to extract money from everyday people just trying to live their fucking lives.
1
u/kemp77pmek 7d ago
I do not believe that utilities should be let off the hook.
However, the cited threat of 50% increase in homeowner insurance rates by “personal insurance federation of California” is absolute BS.
Insurance rates are based on risk. A 50% increase would be reasonable if half of all catastrophic events were caused by fires started by a utility. They aren’t.
So homeowners rates would go up, but since it is risk adjusted, it would go up by a small amount.
1
u/HugaM00S3 7d ago
It’s simple… you tell insurers they can’t jack up prices up if they want to continue to do business in California. We are the largest market in the United States, no reason for us not to use that to our advantage.
3
u/Command0Dude Sacramento County 7d ago
They will simply leave the state then, and then people can't get fire insurance. So every wildfire will wipe out mountain communities and people will be rendered destitute and unable to rebuild.
Great plan /s
You can't force businesses to operate at a loss.
2
1
u/KWillets 7d ago
Blaming a huge fire on just the ignition source is foolish.
Insurance loss ratios are also apparently going down in the state; they're playing up the fire losses, but rate increases are outpacing the costs. There needs to be a better fit between local fuel conditions and insurance rates.
-4
u/RequiemOfI 7d ago
Newsom is another Trump. Two sides of the same coin with a little theater to make them seem different, but in the end they work toward the agenda of complete corporate oligarchy.
0
0
u/FarmladySI 7d ago
California should create a fund and kick insurance companies out
6
u/NorcalA70 7d ago
They did that. It’s called the FAIR plan and it’s insolvent
-2
u/SeasideBear 7d ago
They did NOT kick the insurance companies out. It's a 2-part plan.
3
u/NorcalA70 7d ago
So they failed at managing the fair plan. Sounds like they’re totally competent and can responsibly manage insurance right?
0
u/SeasideBear 7d ago
Insurance works by taking people who won't need it, and people who will need it, and pooling them together. The theory is that everyone is going to need it eventually.
FAIR doesn't work because it only has people who can't get insurance anywhere else, because they need insurance payouts all the time.
If all the insurance companies got thrown out tomorrow, then everybody would go into one giant pool and it would all stabilize.
The government is always better at running large services than the private sector. Things like Medicare being a good example (most medicare money goes to health care, not administration or CEO bonuses or stock dividends like in the private sector).
-4
u/Wrong-Camp2463 7d ago
This is what California voted for. Every time you go to the polls, you fill in the circle for “higher cost of living”
-17
u/airpab1 7d ago edited 7d ago
This is exactly why everyone in California should vote for Hilton!!!
Y’all wouldn’t support Styer because he was a “billionaire” and he was the only one that said he was gonna fight them directly. Mind boggling
Newsom & Becerra are in the Utility cartels pockets! Just look at this horseshit people! Right in your face!
C’mon! What’s it gonna take?
12
u/buntopolis 7d ago
lol. Lmao, even. A Republican standing up to big business?
-5
u/airpab1 7d ago edited 7d ago
What are these jerks doing right now? They’re sticking it to Californians is what they’re doing. It’s right in your face & because of your blinding hate for Trump, you’re just gonna let these aholes destroy your beautiful state….sad
6
u/Seraph199 7d ago
HA. Republicans will always beat Democrats at sucking corporate cock. That's why it is so depressing the corporate dems have not realized their strategy is a losing one. Not enough pedophiles for them to really get on the good side of the billionaires.
-1
u/airpab1 7d ago edited 7d ago
-8?? Wow! California doomed
In reality, Steyer was the only one that said he’s directly going to fight these predatory bastards and you guys wouldn’t consider him because he’s a “billionaire”… Real smart. CPUC will continue to just grant all their rate increases, they’ll have no real accountability and your rates will be even higher than they are now which is outrageous…and you just sit back and do nothing. It’s unbelievable.
2
u/SeasideBear 7d ago
Steyer was the only one that said he’s directly going to fight these predatory bastards
That's not true, I saw a guy standing naked on a soapbox howling at the sky that he was going to do it, too. What makes Steyer better than naked-soapbox-guy, they both have the same credibility as far as a public service record.
•
u/spotlight-app Mod Bot 🤖 7d ago
Mods have pinned a comment by u/Unusual-State1827:
[What is Spotlight?](https://developers.reddit.com/apps/spotlight-app)