State Farm has received approval to reduce the discounts it offers homeowners for wildfire mitigation in California. In addition, the insurer does not have to detail the wildfire risk factors that are used to rate or non-renew their property in writing.

California’s insurance commissioner denied Consumer Watchdog’s petition challenging these failures in the company’s filing implementing the “Safer from Wildfires” regulations.

Beginning on Sept. 1, State Farm will offer a total 6.3 percent discount to policyholders who meet all of the “Safer from Wildfires” individual home hardening and brush clearance standards and also live in a Firewise USA or Fire Risk Reduction Community, resulting in an average policyholder savings of $113 a year.

The discount, according to the consumer advocacy group, is lower than the 7 percent discount State Farm currently offers to homeowners for doing less to protect their homes from wildfire.

Seven of the 10 individual “Safer from Wildfires” mitigation standards – such as the removal of combustible structures from within 30 feet of the property or installing multi-pane windows that withstand heat – will only qualify homeowners for a 0.1 percent reduction in their premium, the advocacy group said.

Consumer Watchdog’s petition sought larger discounts, or a justification from State Farm for reducing them.

The company will also offer an additional 2-3.8 percent discount to homeowners who do more and seek certification from the Insurance Institute for Business and Home Safety (IBHS).

Consumers will have to pay a $125 inspection fee to find out if they qualify for those discounts.

In the first year, the fee will wipe out any savings from the IBHS discount. A homeowner at State Farm’s average premium level who pays for and receives the highest IBHS certification would see their total mitigation discount reduced from $113 to $55.

“The commissioner’s failure to ensure that consumers are given the information necessary to understand their wildfire risk and sufficient incentives to mitigate their properties is disappointing,” said Consumer Watchdog staff attorney Ryan Mellino. “Discounts this small don’t incentivize mitigation and won’t make our state safer from wildfires.”

The petition also sought to enforce the regulation’s requirement that insurance companies explain in writing to consumers what their wildfire risk classification is and in detail why they have received that classification.

Other insurers provide consumers a form that explains what wildfire risk information – such as detail about their individual home characteristics, local fire station access, local vegetation or past fire activity – impacted their premium or non-renewal.

State Farm will not provide a detailed explanation to homeowners of why their property received the assigned premium adjustment due to wildfire risk, the consumer advocacy group stated.

Just one week after the commissioner granted Consumer Watchdog’s petition, he approved State Farm’s filing and rejected the petition without requiring either improved disclosures or more significant discounts.

By giving State Farm the green light, the commissioner is also failing to enforce the “Safer from Wildfires” regulation requirement that insurance companies publicly disclose their wildfire risk models.

Without access to the models, it is impossible to fully assess an insurer’s wildfire risk classifications and associated premium charges, or for policyholders to meaningfully contest their classifications.

Voter-approved Proposition 103 authorizes public participation in rate oversight, which allowed Consumer Watchdog to scrutinize and challenge the filing.