Climate Warriors’ Post-Wildfire Lunacy
SACRAMENTO, Calif — It’s not exactly unheard of for California’s progressive lawmakers to introduce ideologically driven bills designed to make a point rather than solve any problem, but it’s hard to tolerate this nonsense in the midst of a crisis. California’s insurance industry has been in a meltdown in recent years, as insurers flee after a series of devastating wildfires. The latest Los Angeles fires, which will cost insurers upwards of $30 billion, have focused policymakers’ minds on the problem.
We’ve seen some progress as the few adults in charge have passed a series of Department of Insurance reforms that loosen the state’s insurance price caps. Specifically, the state is speeding up the rate-review process, and allowing insurers to use catastrophe models and factor increasing reinsurance rates in their premiums. They’re also shoring up the state-created insurer of last resort known as the FAIR (Fair Access to Insurance Requirements) Plan.
But there’s still plenty of foolhardy legislating. The worst example is Senate Bill 222, which pretends to address the insurance situation but is nothing more than an attempt to blame oil companies for climate change and ignore the real reason insurers have been backing out of our market. As the real reforms bear fruit — seven insurers recently announced their intention to expand their California underwriting — the cynical ones are of course getting the most attention.
SB 222, by Sen. Scott Wiener, D-San Francisco, “would authorize a person to bring a civil action … including damages of $10,000 or more, against a party responsible for a climate disaster or extreme weather or other events attributable to climate change due to the responsible party’s misleading and deceptive practices or the provision of misinformation about the connection between its fossil fuel products and climate change and extreme weather or other events attributable to climate change.”
That’s quite the run-on sentence for saying that this bill would allow wildfire victims and insurers to sue oil companies to cover their losses. Wiener — who alternates between offering sensible laws (mostly relating to housing regulations) and less-sensible ones — puts an insurance spin on this latest effort to destroy the oil industry: “By forcing the fossil fuel companies driving the climate crisis to pay their fair share, we can help stabilize our insurance market and make the victims of climate disasters whole.”
That’s rubbish. “If passed, SB 222 would be overlaying disaster on top of disaster,” says my insurance-expert colleague at the R Street Institute, Jerry Theodorou. “The impact of a natural disaster is bad enough. A bill that encourages subrogation against power and utility providers is gasoline poured on a fire. A lose-lose-lose proposition for power providers, insurers and ordinary consumers.”
California’s economy would suffer if its insurance industry keeps fleeing, so imagine what it will be like if oil companies are further incentivized to pull back production. This bill is particularly amazing given that California Democrats — most notably Gov. Gavin Newsom — have been bloviating about the state’s highest-in-the-nation gas prices. Those are driven by their own regulatory and tax policies, but it’s always more fun to hold press conferences and special legislative sessions railing against price gouging and supposed corporate greed.
Any sentient person knows that this will lead to unending lawsuits and unpredictability for the industry. It’s also stunning that Wiener would introduce something that would make the government the arbiter of what constitutes deceptive speech or misinformation. One man’s disinformation is another’s difference of opinion. So much for free speech. As always, it will just tie up the courts for years.
“SB 222 would absolve local governments and property owners of responsibility for the wildfires and just blame it all on the oil companies,” the Reason Foundation’s Adrian Moore told the Southern California News Group. And California’s residents “will pay the price through higher gasoline and electricity prices.” But I’ll assume supporters must know this and that bill is just a distraction.
Climate probably is increasing fire risks, but that’s no excuse for the state government’s refusal to build a more resilient infrastructure rather than try to change the entire Earth’s climate. By the way, California emits less than 1 percent of worldwide greenhouse gases. I’ve written a book about California’s inability to expand its water infrastructure. More water is crucial to battling drought and fire. The state’s building regulations make it an ordeal to rebuild.
As I’ve written ad nauseam, the California Environmental Quality Act and governmental indifference have reduced the state’s brush-clearance efforts to a snail’s pace. And this bill is presumably about insurance issues, but our insurance regulations leave homeowners vulnerable to major losses. We’re not going to fix the insurance situation by targeting oil companies, but rather by continuing to make the hard choices that enable insurers to price their policies to reflect risk. Only that will lead to a more competitive market.
SB 222 simply scapegoats the oil industry for providing a legal product that powers our economy. Sadly, as some officials continue to bolster the insurance market, others use the crisis to focus on their climate change hobbyhorses. Yet the stakes are too high to keep heading down this route. Let’s hope there still are enough adults left to say no.
Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.
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