Staff Reports
The California Department of Insurance and UC Santa Cruz quietly dropped a feasibility study that sounds like it came from a graduate seminar on climate theater. The report looks at whether insurers could sell “parametric” policies to protect urban forests — city trees and other green infrastructure — against storms, pests, drought and extreme heat. That’s the headline. The real story is how out of touch this looks next to the ongoing homeowners‑insurance crisis that is pricing ordinary Californians out of coverage because of wildfires and market instability.
What the feasibility study actually says
The study is exploratory. It translates the benefits of urban trees into dollar terms — roughly 173 million urban trees, a claimed asset value in the hundreds of billions and about $8 billion in services a year — and asks whether insurers could design parametric payouts tied to measurable triggers like wind speed. The authors found storms are the most feasible peril to insure today; drought and heat are harder because impacts are slow and harder to measure. Crucially, the report recommends more stakeholder work, better data and pilot testing with willing cities. It does not announce a statewide insurance program or a rolling-out of tree policies tomorrow.
Parametric insurance: neat on paper, risky in practice
Parametric insurance pays a fixed sum when a trigger is hit — useful for some disasters, not a cure‑all. It’s also the kind of product that pays money fast but often doesn’t match actual losses. That’s fine for small restoration work. It’s not fine if it becomes a political get‑out‑of‑responsibility card. Insurance Commissioner Ricardo Lara has called these tools “additional” ways to close protection gaps, not replacements for homeowners coverage. But studying whether government can nudge insurers to backstop trees while homeowners can’t find affordable policies looks politically tone‑deaf at best.
Why this should worry homeowners and taxpayers
California’s insurance market is in rough shape because of wildfire losses and carriers limiting exposure. The right priority is getting insurers back into the market, fixing solvency issues, reforming the FAIR Plan and making traditional homeowner policies work again. Channeling regulator time and political capital into creative ways to insure urban forests risks distraction and moral hazard. Who pays if a parametric scheme fails to cover the real loss? Will taxpayers or ratepayers be asked to prop up payouts? Will bureaucrats use vague “resilience” goals to funnel money into favored projects? Those are real questions the report only skirts.
If the state wants to protect urban trees — fine. But do the sensible things first: invest in better forest management, remove dead fuel, improve urban planning, and prioritize making home insurance available and affordable. Try pilots with clear accounting, private insurer buy‑in, and explicit non‑recourse rules so taxpayers aren’t left holding a soggy bill for a policy that was supposed to “resilience‑ize” a sapling. Commissioner Lara and the Department can run their blue‑sky experiments after homeowners are back under their roofs and insurers are actually willing to write policies. Until then, insuring the trees sounds a lot like putting a bandage on the garden while the house is on fire — admirable if you’re a landscaper, dangerous if you’re a homeowner.
