California Insurance Commissioner Ricardo Lara announced the implementation of a regulation aimed at expanding insurance coverage in wildfire-prone areas. the statewhere insurers have fled and homeowners have struggled to find coverage in recent years.

The head of the California Department of Insurance (DOI) said Friday that the state will now allow insurers to use catastrophe models to determine rate increases in hopes of stabilizing the market. In turn, insurers will have to increase comprehensive coverage in fire-prone areas to at least 85% of their market share.

Senator Ricardo Lara joined union groups gathered for a rally in Wilmington on October 3, 2018. Lara is now the commissioner of the state’s Department of Insurance and has proposed reforms to address the crisis of California insurance. (Brittany Murray/Digital First Media/Long Beach Press-Telegram via Getty Images/Getty Images)

“Giving people more options to protect themselves is how we’re going to solve California’s insurance crisis,” Lara said in a statement. “For the first time in history we are demanding insurance companies expand to where people need the most help.”

The DOI said that for 30 years before the rule change, the state required insurers to use historical wildfire losses to determine a catastrophe factor for rates, leading to spikes in premiums after of disasters

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By using catastrophe models, which predict future losses, insurers will be able to consider climate change risks and also take fire risk mitigation measures into account.

A firefighter carries a chainsaw as the Windy Fire burns in the Sequoia National Forest near Johnsondale, California on September 22, 2021. (Getty Images/Getty Images)

The goal is to attract insurers to these high-risk areas and provide more marketplace options than California’s FAIR plan, which has left many homeowners and business owners with a last resort in the absence of other options.

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Regulators hope the ability to raise rates more quickly will prompt a return of insurers that have left the state. Under California’s previous rules, it could take years for insurance companies to get approval to raise premiums.

Downed power lines and the remains of burned homes and vehicles remain after the Glass Fire broke out in Napa Valley, California on September 28, 2020. (Samuel Corum/AFP via Getty Images/Getty Images)

Several insurance companies have paused sales of new home insurance policies in California in recent years due to wildfires and the higher costs of doing business in the state. Now, of the 12 largest insurance companies in California, only five continue to write new policies.

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After State FarmCalifornia’s largest insurer, announced earlier this year that it would cut 72,000 home and apartment policies in California due to inflation, regulatory costs and increased catastrophe risks, Lara called the situation “real crisis”.

Sunny Tsai of FOX Business contributed to this report.