January 24th, 2025

My thoughts and prayers are with those affected by the ongoing California wildfires. As the rebuilding process begins, UC Berkeley Professor Nancy Wallace has proposed several market-driven solutions to strengthen the housing and homeowners insurance markets for the future:

1. Insurance Regulations: Regulators should continue to encourage the use of forward-looking models to set more accurate rates. This will encourage competition among insurers.

2. Offer Insurance Discounts for Fire Prevention: Insurers should be allowed to offer discounts to homeowners who implement fire-resistant measures, reducing the overall risk.

3. Government Retrofit Programs: Government programs should help homeowners retrofit older homes to make them more fire-resistant, lowering both the risk of destruction and potentially the cost of insurance.

4. Stricter Building Codes and Infrastructure: Governments must enact stronger building codes and invest in infrastructure improvements to make communities more resilient to wildfires.

5. Higher Premiums for Fire-Prone Areas: Homeowners in fire-prone areas should pay higher premiums to reflect the increased wildfire risk, ensuring that the financial burden is fairly distributed.

www.npr.org/sections/planet-money/2025/01/23/g-s1-44265/california-wildfire-homes-insurance-prices-crisis