Sen. Dodd, Commissioner Lara, Treasurer Ma Launch California Disaster Insurance Bill to Stabilize State Budget Costs from Catastrophic Events

Thursday, February 14, 2019

SACRAMENTO -- California has seen the cost of fighting wildfires grow to record highs over the past decade. Today, Sen. Bill Dodd, Insurance Commissioner Ricardo Lara, and Treasurer Fiona Ma proposed a new model to reduce wildfire risk with California Disaster Insurance (Senate Bill 290).

SB 290 authorizes the Governor, Insurance Commissioner, and Treasurer to enter into an insurance policy that pays out when California has unexpected costs for disaster response.

California Disaster Insurance would function like home insurance, but for our state – allowing the state to pay a premium using a portion of existing emergency funds that would trigger a payment to the state in the event of a disaster.

“Rising wildfire suppression costs can strain California’s financial resources and threaten cuts to critical programs,” said Sen. Dodd, D-Napa.  “As climate change continues to contribute to devastating infernos, we need a strategy to reduce the pressure on state and community coffers. This bill would do just that, allowing the state to invest in an insurance policy to ensure budget predictability and reduce taxpayers’ exposure to increasing costs associated with disasters, especially wildfires.”

“In seven of the last ten years, our firefighting costs have exceeded our budget projections – by $450 million in 2017 alone,” said Insurance Commissioner Ricardo Lara. “California Disaster Insurance is a better solution that gives taxpayers the benefit of predictable costs, so we can invest in a safer future. As we confront destructive climate-drive events, we need to be open to new models that reduce risk to our communities and budgets. California Disaster Insurance is our first response.”

“This policy makes annual wildfire suppression costs more predictable, protecting the taxpayers from the volatility that has been seen over the past several years and creating budget stability and preserving other investments,” said State Treasurer Fiona Ma. “It is time for California to be proactive and not reactive.”

California spent $947 million in 2017-18 through the emergency fund for firefighting – nearly $450 million more than budgeted, according to Cal Fire. The costs of fighting wildfires have overrun Cal Fire’s emergency budget in seven of the last 10 years. Since 2007, California has experienced 11 of the top 20 most destructive fires in its history.

The federal government, the World Bank, and the state of Oregon have all used insurance to reduce the risk to taxpayers following disasters.

The State of Oregon has purchased insurance protection against ever-changing wildfire costs for nearly 40 years – spending $61 million on premiums and receiving $102 million in insurance payments.

California currently pays for wildfire disasters with available funds, and California Disaster Insurance will come from those same sources.

Giving California greater budget predictability can empower the state to invest to reduce future risks.

SB 290 must be in print for 30 days before it can be scheduled for a committee hearing.



Senator Bill Dodd represents California’s 3rd Senate District, which includes all or portions of Napa, Solano, Sonoma, Yolo, Sacramento, and Contra Costa counties. You can learn more about Senator Dodd at