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Key Findings

• Health of the admitted insurance market: Insurers in the admitted market had high market share relative to surplus and residual markets in both the Northern and Southern California study areas, one indicator of a healthy market. Still, in higher-risk ZIP codes within those areas, admitted insurers had a slightly smaller share of the market, and evidence indicates that market share is falling more rapidly in these areas than in lower-risk areas.
• Premiums: Premiums increase with wildfire risk, and premiums have increased faster in higher-risk areas than lower-risk areas, a sign of a responsive market. Many insurers, however, believe that the rates for higher-risk areas do not fully reflect the difference in risk. Regulators say they need more evidence to justify rate adjustments in higher-risk areas.
• Take-up rates: Living in a higher-risk area does not lower the rate of insurance policy take-up among homeowners once the proportion of housing units that are used for seasonal, recreational, or occasional use is accounted for.
• Amount of coverage: Homeowners in higher-risk areas are purchasing policies with lower coverage limits relative to structure value, potentially creating coverage adequacy issues.
• Deductibles: Homeowners in higher-risk areas are choosing higher deductibles, potentially causing coverage adequacy issues.