How New California Law Chills Wildfire Subrogation Market

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Written By Alejandra Cruz

Source: Live Insurance News  |  By H. Cutner

A new California law gives electric utilities the right of first refusal to settle subrogation claims tied to wildfires, a move poised to disrupt a lucrative market for hedge funds and other alternative investors. The legislation, signed by Gov. Gavin Newsom is part of a larger package designed to strengthen the state’s wildfire prevention and funding strategies.  The change targets the practice of insurers selling the right to sue utilities for wildfire damages to third parties.

Ratepayer advocates have also voiced support for reining in the practice. Mark Toney, executive director of The Utility Reform Network, said hedge funds “will not bid on a claim unless they think they can turn it around for a larger profit.”  “We support strategies that keep the hedge fund profiteering structurally out of the system,” Toney said.

 
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