A bill introduced this week in the California Legislature would authorize the state to pursue fossil fuel companies for insurance-related losses tied to climate-related disasters.
Senate Bill 982, titled the Affordable Insurance Recovery Act, would allow the California attorney general to file civil litigation against oil and gas companies to recover costs associated with climate-induced disasters. Those recoveries could apply to losses experienced by policyholders and by the state’s insurer of last resort, the California Fair Plan Association.
California home insurance premiums have increased at double-digit rates in recent years following a series of destructive wildfires across the state. The Eaton and Palisades fires that ignited on Jan. 7, 2025, alone are expected to generate up to $45 billion in insured losses.
At a press conference outside the state Capitol, Sen. Scott Wiener, D-San Francisco, the bill’s lead author, said the proposal is intended to address who bears the financial burden of climate-related disasters. Wiener stated that survivors, taxpayers, and policyholders have absorbed rising costs through higher insurance premiums, while fossil fuel companies have not contributed to those losses.
Under the bill, recovered funds could be used to compensate policyholders for rising premiums and related expenses, including investments to harden properties against fire damage.
The California Fair Plan Association also would be eligible for compensation. The Fair Plan, which provides coverage when homeowners cannot obtain insurance in the private market, is operated and backed by the state’s licensed home insurers. Its policy count has grown significantly as insurers have reduced exposure in wildfire-prone areas.
The Fair Plan expects to pay approximately $4 billion in claims related to the January 2025 wildfires. To meet those obligations, it assessed $1 billion against its member insurers. About half of that amount is being passed on to residential policyholders statewide through a surcharge. The Fair Plan is also seeking a 36% rate increase. A spokesperson for the association declined to comment on the legislation.
Sen. Ben Allen, D-Pacific Palisades, whose district includes areas affected by the Palisades fire, is a co-author of SB 982. Supporters of the bill include the Consumer Federation of California, California Environmental Voters, and the Eaton Fire Survivors Network, a community group based in Altadena.
Industry groups oppose the measure. Jim Stanley, a spokesperson for the Western States Petroleum Association, said the bill would raise gasoline prices and harm employment. He described the proposal as a political measure that would expose oil and gas companies to liability for natural disasters across the state, which he said would lead to extensive litigation.
The legislation follows earlier efforts in California to hold energy producers financially responsible for climate-related costs. In 2023, Attorney General Rob Bonta filed suit against Exxon Mobil, Shell, Chevron, ConocoPhillips, and BP. The lawsuit alleged that the companies engaged in a long-term campaign to mislead the public about climate change, resulting in tens of billions of dollars in state expenditures related to environmental damage.
Last year, California lawmakers also considered two bills known collectively as the Polluters Pay Climate Superfund Act. Those measures would have required large oil and gas companies operating in the state to contribute to a fund supporting climate adaptation efforts. While similar laws were enacted in New York and Vermont, California’s proposal stalled amid strong industry opposition.
California is not the only state considering legislation related to insurance costs and climate-related losses. In New York, lawmakers are evaluating a bill that would allow the state attorney general and property insurers to bring legal actions against parties deemed responsible for climate-related disasters. Hawaii lawmakers are also considering similar legislation following the 2023 Maui wildfires, which caused estimated losses of $3 billion or more.
SB 982 is now under legislative review.
Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.