Acting to protect communities from increasing climate disasters, Commissioner Lara sponsors legislation to fund innovative insurance projects
News: 2025 Press Release
SACRAMENTO, Calif. — Acting to protect communities from increasing climate disasters, Insurance Commissioner Ricardo Lara today announced he is sponsoring Assembly Bill 1236, the Local Climate Insurance Pilot Projects Act. The bill, authored by Assemblymember Celeste Rodríguez, would support innovative programs that help reduce risk before the next catastrophe. The bill would also help close protection gaps for uninsured and underinsured individuals and communities to rebuild stronger after climate disasters.
The bill passed the Assembly Insurance Committee today with strong support from a wide range of organizations, ranging from social justice non-governmental organizations to insurance trade associations, academic institutions to environmental advocates.
Last October, Commissioner Lara testified at the Assembly Insurance Committee’s informational hearing “Parametric Insurance: What it is & the Role it Could Play” regarding innovative insurance mechanisms like parametric and community-based insurance, in addition to testimonies given by academics, consumer groups, and insurer trade groups. He said risk reduction measures such as extreme heat early warning systems and nature-based solutions, such as wetlands for community wide flood risk mitigation,can help communities avoid the worst impacts of a disaster and recover as quickly as possible — and should be part of an overall “climate insurance” strategy. The grants funded by AB 1236 will yield public benefits that address the availability and affordability of insurance, particularly for low-income individuals impacted by climate change.
“The climate crisis demands action and innovative solutions. It’s time for California to align with the rest of the world, which has been developing innovative climate insurance solutions to protect our most vulnerable populations for years now,” said Commissioner Lara. “AB 1236 supports local projects in communities that can least afford insurance and have the most to lose after a disaster. Nature serves as our first and best line of defense against climate change, whether through wetlands and floodplains that absorb floodwaters or urban tree canopies that reduce temperatures in cities.”
“Communities in our state deserve resources and investments to ensure they can withstand and recover from climate disasters. AB 1236 creates a grant program to deliver projects and explore innovative approaches to reduce risk, and ultimately, expand insurance coverage options in a time when it is desperately needed,” said Assemblymember Celeste Rodriguez.
The California Department of Insurance is collaborating with experts from universities, community based and non-profit organizations, local governments, Tribal nations, philanthropic organizations, and insurance companies to create innovative approaches to insurance that will increase uptake and improve resilience to climate change at a community scale.
Organizations supporting AB 1236 include:
- The Nature Conservancy
- California Forward
- Environmental Defense Fund
- Inclusive Action For The City
- Climate Resolve
- Independent Insurance Agents & Brokers Of California, Inc.
- Rise Resilience
- University of California Santa Cruz
- American Property Casualty Insurance Association
- National Association of Mutual Insurance Companies
- Pacific Association of Domestic Insurance Companies
- Personal Insurance Federation of California
- The Alliance of Regional Collaboratives for Climate Adaptation
- San Mateo County Flood and Sea Level Rise Resiliency District
“The time to focus our efforts on improving the risk reduction and climate resilience of our most vulnerable communities is now,” said Senior Policy and Grants Administrator Chuck Mills on behalf of TreePeople. “AB 1236 is a critical step in that direction.”
“Nature-based solutions can significantly reduce disaster risk, which can increase availability and lower the cost of insurance. For example, wetlands can reduce storm surges to coastal areas, thinning and applied fire can reduce wildfire risk in forested areas, and setback levees with multiple benefits to reduce flooding,” said Michael Jarred on behalf of The Nature Conservancy. “AB 1236 supports important pilot projects that further demonstrate the value of nature-based insurance solutions, which will allow the increased use of these practices to address rising insurance costs.”
Senate Bill 30, authored by Commissioner Lara as a senator, was enacted in 2018, directing the California Insurance Commissioner to convene the Climate Insurance Working Group to identify, assess, and recommend risk transfer market mechanisms that promote and create incentives to reduce risks of climate change, particularly for vulnerable communities.
The Working Group, comprised of experts in public policy, climate, and insurance, published the Climate Insurance Report in 2021, providing recommendations to protect California’s communities, preserve nature, and build resilience. An overarching recommendation in the report was to prioritize closing protection gaps by focusing on the protection of areas with low insurance uptake and high risk, thereby increasing both local community and statewide resilience.
AB 1236 would establish the Climate and Sustainability Insurance and Risk Reduction Program, to be administered by the California Department of Insurance with funding appropriated by the Legislature. The Department would administer the grant program to support the design and funding of readily implementable and scalable insurance products to increase resilience, especially in low-income communities where climate risks are currently uninsured or underinsured, to achieve the following goals:
- Develop proofs of concept and demonstration projects that expand insurance options through the use of insurance mechanisms including but not limited to community-based insurance and parametric insurance, in order to shrink the protection gap in vulnerable and disadvantaged communities that are most exposed to climate risks.
- Test community-purchased insurance to reduce overall insurance costs, paired with risk reduction activities that may be funded by other agencies.
- Support projects that incorporate nature-based solutions to achieve both risk reduction and enhanced ecosystem services.
- Support projects that emphasize regional and community-scale approaches to reducing risk.
- Educate communities on the role that insurance can play in preparing for catastrophic climate events, as well as building resilience in the aftermath of such events.
AB 1236 would require the Department to report to the Senate Committee on Insurance and the Assembly Committee on Insurance on program results on or before January 1, 2029, and on or before January 1, every 3 years thereafter until January 1, 2035.
The bill goes next to the Assembly Appropriations Committee for consideration.
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Media Notes:
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
