Newsom wildfire insurance plan draws industry warning

Key Points:

• Fifteen major insurance company CEOs, including Allstate and State Farm, warned that Gov. Gavin Newsom’s proposal to eliminate or phase out subrogation rights for wildfire-related losses could raise insurance rates and destabilize California's insurance market.
• The proposal aims to prevent investor-owned utilities like PG&E from reimbursing insurers for wildfire damages they cause, shifting more financial burden onto insurers and potentially homeowners.
• Newsom's revised plan would phase out subrogation gradually, allowing insurers limited recovery over time, contingent on approval of rate increases by the future state insurance commissioner, whose identity remains uncertain.
• Insurance industry leaders argue that eliminating subrogation would lead to higher premiums, estimated between $375 and $1,875 annually depending on wildfire risk, and reduce deductible refunds to customers.
• While the California Professional Firefighters union supports Newsom’s changes, wildfire victims oppose limits on compensation and redefinition of victim status; utilities have not publicly commented, and the proposal must be formalized soon to meet legislative deadlines.