SB 1370 directs the administrator to prepare a comprehensive report for the Governor and Legislature that evaluates new models to mitigate damage, speed recovery, and allocate financial burdens from catastrophic natural disasters — including wildfires and earthquakes — either to complement or replace California’s Wildfire Fund. The bill requires the report to draw on stakeholder feedback and interagency consultation and to lay out specific recommendations for insurance, financing, mitigation, and legal-structure changes.
The report could become the blueprint for major policy choices: shifting risk-sharing between insurers, utilities, ratepayers, homeowners, and government; offering options ranging from state-backed reinsurance to mutual insurance pools; and assessing litigation reforms aimed at faster, lower-cost payouts. For compliance officers, insurers, utilities, and municipal planners, the report’s recommendations will signal the possible contours of regulatory and statutory change in the near term.
At a Glance
What It Does
The bill requires the administrator, in consultation with multiple state agencies and after soliciting stakeholder feedback, to produce and submit a recommendations report on models to mitigate catastrophe losses and allocate associated costs, including options to complement or replace the Wildfire Fund. The report must analyze specific topics (insurance accessibility, risk-socialization structures, mitigation technologies, financing tools, liability limits, and models like state-supported reinsurance or mutual funds) and present findings to designated Senate committees.
Who It Affects
This work directly affects electrical corporations and local publicly owned utilities, property insurers and reinsurers, homeowners and property owners in high-risk areas, ratepayer advocates and ratepayers who could face assessments, and claimant attorneys and insurers involved in wildfire litigation. State agencies that regulate utilities, insurance, emergency services, and forestry will also be central to any implementation.
Why It Matters
The report consolidates technical analysis and stakeholder positions that could justify systemic changes to how California spreads catastrophic risk — from new public backstops to litigation shortcuts — with consequences for insurance markets, utility accountability, and ratepayer costs. Professionals should treat this as a policy roadmap: its recommendations could be translated into statute or regulatory action altering liability, coverage, and funding approaches.
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What This Bill Actually Does
SB 1370 charges the administrator with producing a single, actionable report that compares and recommends alternative models for handling catastrophic natural-disaster losses. The administrator must work with the Public Utilities Commission, the Office of Energy Infrastructure Safety, Department of Insurance, Office of Emergency Services, and Cal Fire, and solicit input from a broad set of stakeholders — from ratepayer and policyholder advocates to utilities, insurers, and claimant attorneys.
The goal is practical: identify structures that reduce harm, speed compensation, and spread costs in ways that are responsible and equitable.
The bill sets out a menu of analytical tasks the report must perform: assess property insurance affordability and availability under worsening climate risks; evaluate structures that socialize risk (for example, state-backed reinsurance, mutual pools, or other shared-reserve mechanisms); catalog mitigation and technology options that reduce ignition and fire spread; and examine financing tools and special assessments that could accelerate community recovery. Importantly, the report must analyze concrete legal reforms — including possible limits on categories of damages, attorney fees, or aggregate liability per event — and estimate their impacts on homeowners, insurers, and public entities.Operationally, the administrator may hire outside experts and pay them from Wildfire Fund assets to get actuarial and program design work done.
Once finished, the report must be presented to five Senate committees with jurisdiction over emergency management, energy, insurance, judiciary, and natural resources. The statute creating this reporting duty includes a sunset provision, repealing the requirement in 2030, which signals a time-limited policy window to act on the recommendations.
The Five Things You Need to Know
The administrator must deliver a recommendations report that evaluates alternatives to the Wildfire Fund and other catastrophe models; the report must analyze insurance, mitigation, financing, litigation limits, and structural alternatives such as state-supported reinsurance or mutual insurance funds.
The report must examine proposed litigation reforms that could limit recoveries — including attorney’s fees, economic and noneconomic damages, public entity claims, out‑of‑perimeter claims, and aggregate per‑event liability caps — and assess their effects on homeowners and insurers.
The administrator may retain outside consultants, academics, and other experts and pay them using Wildfire Fund or related account assets to support the report’s preparation.
When complete, the administrator must present the recommendations to five specific Senate committees: Emergency Management; Energy, Utilities and Communications; Insurance; Judiciary; and Natural Resources and Water.
The statutory reporting requirement is temporary: the provision establishing the report is set to repeal on January 1, 2030.
Section-by-Section Breakdown
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Definitions tieback to existing law
This subsection incorporates definitions by reference to Section 3280, so any term used in the reporting requirement draws from existing insurance-related terminology rather than creating new statutory definitions. For implementers, that means interpretive questions will default to established meanings in California’s insurance code, which simplifies cross-references but may import contested definitions into the analysis.
Report mandate, consultation, and stakeholder input
This provision assigns responsibility to the administrator to prepare the report and explicitly requires consultation with a list of state agencies (PUC, Office of Energy Infrastructure Safety, Department of Insurance, OES, and Cal Fire). It also mandates soliciting feedback from named stakeholder groups — ratepayer and policyholder advocates, electrical corporations, insurers, and claimant attorneys — which structures the process around both regulator expertise and affected interests. The inclusion of utilities and claimant attorneys ensures the report must square operational safety concerns with claims realities, not just theoretical models.
Ten required topic areas the report must address
This subsection is the heart of the bill: it lists ten discrete themes the report must analyze, ranging from insurance accessibility and alternative risk‑sharing structures to mitigation technologies, financing mechanisms, ratepayer protections, streamlined compensation options, litigation-limit analyses, community hardening programs, land-use and insurance incentives, and concrete models (state-supported reinsurance, mutual funds, improvements to the existing fund). For practitioners, this requires the report to combine actuarial work, statutory drafting options, program design, and legal impact assessments — effectively a feasibility study plus draft policy options.
Authority to hire and fund outside expertise
The administrator may retain consultants, academic experts, and other professionals and explicitly may compensate them using Wildfire Fund assets or related account assets. That gives the office flexibility to commission technical actuarial and legal work without needing a separate appropriation, but it also draws on the Fund’s resources, which could reduce amounts available for other Fund activities unless carefully budgeted.
Presentation requirements and sunset
The statute requires the administrator to present the report’s recommendations to five named Senate committees, ensuring legislative leaders across emergency management, energy, insurance, judiciary, and natural resources see the findings. The bill also requires submission in compliance with Government Code reporting rules and includes a repeal date for the section on January 1, 2030, making this a time-limited, diagnostic mandate rather than an open-ended program. The sunset signals that any follow-on statutory work would need affirmative legislative action.
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Who Benefits
- Homeowners in high-risk areas: The report could recommend mechanisms (state-backed reinsurance, pooled funds, or streamlined compensation) that expand access to affordable coverage or shorten the time to full compensation after a loss.
- Ratepayer advocates and stability-minded policymakers: Options that reduce fiscal uncertainty (for example, durable reinsurance or pooled reserves) could smooth utility-related assessments and lower volatility in rates over time.
- Local governments and communities: Financing and expedited recovery mechanisms identified in the report could accelerate rebuilding, reducing downtime for local economies and public services.
Who Bears the Cost
- Electrical corporations and publicly owned utilities: Proposals that increase mitigation obligations, require financial participation in shared-risk mechanisms, or impose assessments will raise operational and financial burdens on utilities.
- Insurers and reinsurers: Structural changes that socialize risk or cap litigation recoveries will change loss exposure, pricing models, and capital requirements; some reforms could compress underwriting margins or require new participation commitments.
- Ratepayers and taxpayers: If the report advances special assessments, public backstops, or state-supported reinsurance, the costs will be distributed to ratepayers through utility bills or borne by taxpayers through budgetary exposure.
Key Issues
The Core Tension
The central dilemma SB 1370 surfaces is between creating faster, more affordable, and resilient mechanisms for compensating catastrophe victims (which favors risk-pooling, public backstops, and limits on litigation) and preserving private-market accountability and full compensation rights (which favors robust tort recoveries, market-based pricing, and private insurer risk-bearing). Solving one side tends to weaken the other, and the report must weigh those competing public-policy priorities.
SB 1370 is an analytical mandate that collects options rather than prescribing a single solution, but the design choices it elicits are full of trade-offs. Speed and predictability of compensation (for example via capped recoveries or a streamlined claims mechanism) can reduce transaction costs and accelerate rebuilding, but they also shrink remedies for injured parties and change the incentive structure for utilities and insurers.
Similarly, socializing risk through state-supported reinsurance or mutual funds can stabilize markets and broaden coverage, but risks moral hazard and exposes public balance sheets to catastrophic losses unless paired with strong mitigation and accountability measures.
Operational challenges are real. Estimating actuarial impacts across heterogeneous wildfire zones, modeling interactions between mitigation investments and insurance pricing, and quantifying the distributional effects of litigation limits require sophisticated, often costly analysis — which the bill permits but funds from the Wildfire Fund itself.
Using Fund assets for consultants may speed study completion but reduces resources otherwise available for claims or reserves. Finally, the statutory sunset compresses the window for legislators to act on recommendations; technical solutions developed in a short timeframe may need more testing before becoming law or regulation.
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