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       California Insurance Commissioner Ricardo Lara took steps on Thursday to allow property insurers to factor in climate risks including wildfires in rate prices, if they increase underwriting in at-risk areas to wean consumers off state-funded coverage.

       Since 2022, seven of the state's top 12 insurers have paused or restricted new business, including State Farm and Liberty Mutual, and the government's Fair Access to Insurance Requirements (FAIR) Plan, intended as an insurer of last resort, has risen to a 3% share of California's market.

       "We are at a major crossroads on insurance after multiple years of wildfires and storms intensified by the threat of climate change," Lara said in a statement.

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       A house is fully engulfed by flames at the Dixie Fire, a wildfire near the town of Greenville, California, United States, on Aug. 5, 2021. (REUTERS/Fred Greaves/File Photo)

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       The measures by the state's insurance regulator follow an executive order by Governor Gavin Newsom urging regulatory action to expand coverage in underserved areas, account for catastrophe risks in rates, and keep the FAIR Plan solvent.

       A report by broker Gallagher Re in July said U.S. property catastrophe reinsurance rates rose by as much as 50% at a key July 1 renewal date, with states such as California and Florida increasingly hit by wildfires and hurricanes due in part to climate change.

       The continued retreat of larger insurance carriers from the California residential property insurance market signals ongoing regulatory constraints, rising cost inflation, and higher catastrophe losses, credit rating agency Fitch said in a note earlier this year.