Burnt Wiener Sandwich
San Francisco State Senator Scott Wiener is California’s most devious and craven politician. Sensing an opportunity to pit two despised industries against one another, he submitted a new bill, seemingly overnight, that blames California’s recent wildfires on oil companies and allows insurance companies to sue them. Senate Bill 222 is another bill in a long line of deflective legislation designed to hide his party’s role in yet another crisis.
The bill encourages insurance companies to sue the oil and gas industry (and punishes them if they don’t) because the state desperately needs $523 million immediately or it will not be able to pay claims of thousands of Californian who trusted the state-run California’s FAIR Plan to protect them. Desperate to conceal decades of fire mismanagement by state and local leadership, Wiener’s bill declares oil and gas companies are responsible for climate change, and thus the fires themselves. For California’s Democrats, it is legislative Nirvana.
The California FAIR Plan, the state-run plan for fire-prone properties private insurance companies will not cover, has only $377 million in the bank but must soon pay an estimated $5 billion in claims. Those claims will be covered by $5.75 billion in “reinsurance” (which is insurance on insurance) but there is a catch: to get that reinsurance money, FAIR must first pay $900 million to claimants (it only has $377 million). To meet the reinsurance requirement, FAIR will exercise its power to charge all of California’s private insurance companies a $523 million “assessment.”
Private insurers will legally pass the assessment onto California’s homeowners. Each homeowner in the state would have to pay a one-time surcharge of $1,000, possibly more, to cover the $523 million. Each and every homeowner.
Since 2020, more Californians have been forced to buy fire-insurance from the FAIR plan as private insurers fled the state or dropped out of wildfire prone areas. By 2024, the FAIR Plan was insuring over $5 billion in property but only had $700 million in the bank. One big fire could push the system into a crisis.
Which was exactly what happened last month and, like so many of California’s other crises, was predicted and preventable. In March 2024, Victoria Roach, California Fair Plan President, testified before the Assembly Insurance Committee saying, “We are one event away from a large assessment. There’s no other way to say it, because we don’t have the money on hand [to pay every claim] and we have a lot of exposure. [many claimants].”
Even a representative of Consumer Watchdog was there to admonish the committee to favor a private insurance market. Kim Stone, a lobbyist for Consumer Watchdog, said, “We think that the best way to put the fair plan on solid financial ground is to get policyholders back into the voluntary regular homeowners insurance market… We urge the Committee not to force struggling families with little to no wildfire risk to pay billions to bail out the insurance company for abandoning California neighborhoods.”
California neglected to reform insurance regulations in 2024, but it did spend a lot of time attacking the oil industry. Scott Wiener and Consumer Watchdog are old friends and both hate all things petroleum. No doubt he considered Stone’s words to the committee. His bill, like many others filed in recent years, is filled with Consumer Watchdog rhetoric which presumes “Big Oil” knew all along “climate change” disasters would occur yet sold their vile product anyway to an unsuspecting public. Consumer Watchdog likely wrote the bill, actually.
A portion of the bill is outright extortion. The law would require yet another “independent advisory body” (appointed by the State Insurance Commissioner) to decide if the benefits of suing the oil companies outweigh the costs. If so, the $5 billion assessment (or any in the future) is charged to private insurers which are then compelled by reward or punishment:
“A member insurer’s share of the assessment shall be reduced by 10 percent if the insurer exercises its right of subrogation [right to sue] against a responsible party [oil company]. A member insurer’s share of the assessment shall be increased by 10 percent if the insurer does not exercise its right of subrogation against a responsible party. Assessment reductions for insurers utilizing subrogation shall be covered by remaining insurers who do not utilize their right of subrogation.”
Thus private insurance companies that sue the oil industry for the assessment costs will pay 10 percent less. Those that fail to sue and pass on the assessment to their unfortunate customers will pay 10 percent more, which we must assume is ALSO passed on the California homeowners.
There is no guarantee the insurance companies will prevail. Oil companies have not yet been found liable for climate change in any state or Federal court. However, California’s insurance companies may file so many lawsuits that it would cheaper for the oil industry to simply pay the $523 million. If so, they may set a precedent, an action that would be interpreted as an admission of guilt and inviting even more lawsuits. Scott Wiener knows this. In any event, California’s homeowners and motorists will eventually pay for it all in cash, inconvenience, and worry.
For SB222 to become law, it must still be read and debated in various committees, passed, read in the Assembly at large, passed again and then the same must happen in the Senate and Governor Newsom must sign it. However, California’s legislature can move quickly on anti-petroleum bills and, given the political need to distract public outrage over the recent wildfires, we can assume legislators will move quickly.
Truman Angell is an oil industry expert.
Sources:
https://calmatters.digitaldemocracy.org/hearings/257632?t=904&f=bb467d1c0e8b6f8f2035f7d697575c7a
https://fortune.com/2025/01/18/fair-plan-la-wildfire-exposure-5-billion-palisades-eaton-claims-payments-reinsurance/
https://en.wikipedia.org/wiki/California_FAIR_Plan#cite_note-ForbesJan18-8
https://www.nytimes.com/2025/01/14/climate/californias-insurance-fair-plan-fires.html
