According to California Senate Bill 222, victims of certain disasters in California, including wildfires, can file lawsuits and seek compensation from oil and gas companies.
This new law, initiated by the Center for Climate Integrity and California Environmental Voters, aims to hold accountable companies responsible for climate disasters, extreme weather events, or other events caused by climate change, due to their misleading and concealing of the environmental impacts of their products.
The bill, also known as the Affordable Insurance and Climate Recovery Act, was proposed by California Democratic Senator Scott Wiener on January 27. It allows insurance companies, under specific conditions, to file civil lawsuits against oil and gas companies for compensation for losses, including damages exceeding $10,000.
According to a report by AccuWeather on January 13, the losses caused by the January wildfires in Los Angeles are estimated to exceed $250 billion and could even reach $275 billion.
This deadly wildfire is also expected to exacerbate the crisis in California’s insurance industry. Analysts from Wells Fargo estimate that insurance industry costs could be no less than $20 billion. Estimates from catastrophe risk modeling company KCC and real estate tech company Home.com range from $28 billion to $30 billion.
Wiener’s office stated on the 27th that SB222 aims to shift the increased insurance costs from California taxpayers to fossil fuel companies driving the climate crisis, thus improving California’s insurance affordability.
The office further stated, “The fossil fuel giants have intentionally misled the public for decades, concealing the impacts of their products on the environment, and now Californians are paying the price, facing devastating wildfires, mudslides, rising sea levels, and soaring insurance costs.”
The bill faced opposition from Wiener’s Republican colleagues and the oil and gas industry.
On the day the bill was proposed, Republican Senator Brian Jones posted on the social media platform X, stating that they are blaming climate change for government mismanagement and failures, perhaps next they will blame homeless camps on oil prices.
Catherine Reheis-Boyd, CEO of the Western States Petroleum Association, stated in a release, “We need real solutions to assist victims, not theatrical acts.” She also remarked that these legislators are merely treating the LA wildfires as a political opportunity.
She pointed out that consumers and California’s economy depend on oil and gas in fossil fuels, and the state government is trying to reduce this dependency. She said, “The vulnerabilities in existing oil and gas infrastructure must be addressed.”
A report from the California Legislative Analyst’s Office on January 7 highlighted that wildfire-related costs and California’s climate policies have increased electricity prices in California, as these costs are passed on to consumers.
California law also allows the FAIR Plan to pass on additional insurance coverage costs to policyholders outside the FAIR Plan.
The FAIR Plan targets high-risk groups who cannot obtain policies from insurance companies and serves as the last resort for these homeowners. The state government mandates all licensed insurance companies to collectively provide insurance services under the FAIR Plan.
In areas affected by the recent major wildfires in Los Angeles, there are about 2,500 FAIR Plan policyholders, with 1,467 policies covering homes in Pacific Palisades, where about 8,000 buildings have been damaged by the fires. Additionally, nearly 1,000 policies in Altadena have been affected by the Eaton fire, with over 10,000 buildings destroyed in the area.