DOI Supports AB 970: Establishing a Climate and Sustainability Insurance and Risk Reduction Program


By Shiloh Wallack

AB 970 (Rivas), introduced on February 14, 2023, by Assemblymember Luz Rivas, and supported by the Department of Insurance (DOI), would add and repeal Article 2.5 (commencing with section 12945) of Chapter 2 of Division 3 of the Insurance Code, to establish, and require DOI to administer, the Climate and Sustainability Insurance and Risk Reduction Program. AB 970 attempts to address the challenges posed by climate change in California, and the program seeks to expand insurance options for vulnerable and disadvantaged communities where climate risks are currently uninsured or underinsured. AB 970 furthers Commissioner Lara’s Sustainable Insurance Roadmap announced with the United Nations’ Principles for Sustainable Insurance Initiative in November 2022. AB 970 aims to achieve some of the Roadmap’s goals that, include the development of proof of concepts that promote investment in natural infrastructure to reduce climate risks and provide mitigation incentives for private investment in natural lands to lessen exposure and reduce climate risks to public safety, property, utilities, and infrastructure.

If passed, the bill would establish six climate insurance pilot projects in specified local jurisdictions to reduce physical risks from flooding and extreme heat and the protection gap in communities with high risks and low insurance uptake. Local jurisdictions would be required to develop and establish a specific pilot project in consultation with DOI to achieve particular objectives, including prioritizing pre-disaster mitigation activities. The department would provide technical support for the pilot projects and establish a competitive grant solicitation program to support the design and funding of readily implementable and scalable projects that address climate risks and expand insurance options.

However, the bill imposes new duties on local jurisdictions relating to the pilot programs, creating a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. If the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made under the statutory provisions.

On March 22, the bill was passed in committee and referred to the Assembly Committee on Appropriations. At this writing, no further action has been taken.


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