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Insurance companies have dramatically pulled back from offering homeowners policies in California. That's tied to inflation and wildfires fueled by climate change and decades of fire suppression. Now, as reporter Danielle Venton of member station KQED tells us, the state's hoping to lure the industry back with an extreme overhaul of how it regulates insurance.

DANIELLE VENTON, BYLINE: Grass Valley sits in the foothills of the Sierra Nevada. It's old gold mining country, and it's where Jim Boyd's daughter decided to start her family.

JIM BOYD: They settled here and I was ready for a new challenge. And so - and I kind of like my kid, so that's why I'm here.

VENTON: He'd spent the past 20 years as a hop farmer in Washington. Now he's almost retired.

BOYD: I'm just trying to relax and enjoy life. I'm going to flip the switch next month and actually start Social Security.

VENTON: He's been here for a year and a half and loves it, with one big exception.

BOYD: I didn't realize the impact that fire insurance really turned out to be.

VENTON: An irony is that Boyd bought this house because the previous owners had thoroughly retrofitted it with things like a new roof, windows and siding to be fire resistant, which should have made it more attractive to mainstream insurers, but none would write him a policy. He has a mortgage, though, so insurance is a requirement of the loan.

BOYD: That left me with the California FAIR plan.

VENTON: Which is really expensive.

BOYD: It's going to be over $8,000 a year pretty quick.

VENTON: That includes some supplemental insurance for things other than fire. But still, it's a lot. Across the state, Californians have been increasingly pushed toward the FAIR plan, which offers bare-bones coverage. Standing for fair access to insurance requirements, it's California's insurer of last resort. Now the state is finally taking action to get people off it.

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RICARDO LARA: We are on our way to enacting the state's largest insurance reform in 30 years.

VENTON: That's California Insurance Commissioner Ricardo Lara testifying in front of state lawmakers last month. Insurance experts say regulations here have kept premiums artificially low and inflexible, which is part of what's driving insurers away. So by the end of the year, the state plans to make big changes that the industry wants. In return, insurers must write more policies for people like Jim Boyd.

KARL SUSMAN: So it's really a carrot and stick.

VENTON: Karl Susman is an insurance broker and owner of Susman Insurance Agency in Los Angeles. He explains companies like Farmers, State Farm and Allstate will be required to offer policies to 85% of homeowners in places categorized as wildfire-distressed areas. That's the condition of getting what they want.

SUSMAN: They have to be in compliant of this 85% rule.

VENTON: Will they go for it? During a regulatory hearing this spring, the plan got a big endorsement from Allstate. Gerald Zimmerman, an Allstate executive, said once the changes are in effect...

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GERALD ZIMMERMAN: Allstate will begin writing new homeowner insurance policies in nearly every corner of California.

VENTON: Reached for comment, Allstate confirmed their position hadn't changed. In a statement, State Farm said they were working with regulators to pursue these reforms. Farmers did not respond. Actuary Nancy Watkins calculates insurance risk and thinks the state is moving in the right direction, but its problems aren't solved. As long as human-driven climate change keeps increasing the risk of disasters, insurance premiums will get more expensive for customers. She says to solve that requires regulations beyond insurance tweaks, like local governments passing strict rules about wildfire safety.

NANCY WATKINS: That might mean removing all burnable materials within five feet of your house.

VENTON: Such a regulation would be unpopular and difficult to pass.

WATKINS: However, my fire chief friends tell me it might make the difference between our town burning down and our town making it through.

VENTON: The new insurance regulations will go into effect in 2025. But first, California homeowners still need to get through this fire year. For NPR News, I'm Danielle Venton in Grass Valley.

(SOUNDBITE OF ADRIAN YOUNGE, LAETITIA SADIER AND BILAL SONG, "STEP BEYOND") Transcript provided by NPR, Copyright NPR.

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