California has acted to ensure continuing insurance protections for more than 200,000 policyholders in the Mountain Fire area in the state’s south.

A state moratorium prevents insurance non-renewal or cancellation for one year from the date of a governor emergency declaration, regardless of whether the policyholder suffered a loss.

“Homeowners afflicted by devastating wildfires deserve the peace of mind that their home and future will remain covered by insurance as they recover,” state insurance commissioner Ricardo Lara said.

“Protecting wildfire survivors from non-renewals gives people time to assess their options and make decisions without having to worry about whether they will still have insurance.”

California Governor Gavin Newsom proclaimed a state of emergency in Ventura County due to the Mountain Fire on November 7. The fire has burnt almost 10,000 hectares, forcing the evacuation of residents, destroying homes and threatening critical infrastructure.

The insurance cancellation moratorium power was introduced under a 2018 law and has been used since 2019 to protect nearly 4 million homeowners in the state, the Department of Insurance says.

Mr Lara also last week said the department has submitted a wildfire catastrophe modelling regulation for approval.

It introduces a requirement for insurers to increase their policy offerings in underserved areas as a condition of incorporating catastrophe modelling into rate-making.

Companies must increase the writing of comprehensive policies in wildfire-distressed areas equivalent to no less than 85% of their statewide market share, while catastrophe models must account for mitigation efforts by homeowners, businesses and communities.

The department is finalising the hiring of a model adviser to examine model integrity and ensure public review and compliance.

“As California experiences more intense climate impacts, technology will tell us where the risks truly are and accurately price rates that reflect mitigation and hardening investments,” Mr Lara said.

The American Property Casualty Insurance Association says catastrophe models are an important tool to help stabilise the market.

“We commend Commissioner Lara for prioritising this critical reform as a part of his Sustainable Insurance Strategy,” association vice president of state government relations Mark Sektnan said.

“Importantly, this regulation represents just one piece of the comprehensive reforms needed to restore access and availability to California’s insurance market.”