Insurance: Climate and Sustainability Insurance and Risk Reduction Grant Program.

2025-2026 Regular Session Introduced by Mike Gipson and 2 co-sponsors

Establishes a time-limited grant program to pilot and expand innovative, community-based insurance and nature‑based risk reduction to reduce climate disaster protection gaps.

In committee: Held under submission.

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Main purpose

AB 1236 directs the California Department of Insurance to establish and run a time‑limited grant program to pilot and expand insurance mechanisms and risk‑reduction approaches that address climate‑driven disasters (wildfire, flood, extreme heat, biodiversity loss). The program aims to shrink insurance protection gaps—especially in vulnerable and disadvantaged communities—by supporting proofs of concept such as community‑purchased insurance, parametric products, and nature‑based risk reduction paired with insurance.

Key provisions

Adds Article 2.5 (Sections 12945–12947) to Chapter 2 of Division 3 of the Insurance Code establishing the "Climate and Sustainability Insurance and Risk Reduction Grant Program."

Program funding: subject to appropriation by the Legislature (the bill itself does not appropriate funds).

Program goals (selected):

Develop proofs of concept that expand insurance options (including community‑based and parametric insurance) to reduce protection gaps.
Explore innovative insurance approaches focused on areas exposed to extreme heat, wildfire, flooding, or biodiversity loss and on underinsured communities.
Test community‑purchased insurance to lower overall costs, coordinated with risk‑reduction activities potentially funded by other agencies.
Support projects that use nature‑based solutions to reduce risk and enhance ecosystem services.
Support regional and community‑scale risk reduction and create "climate resilience districts" per Government Code Division 6 (commencing with §62300).
Provide community education on insurance’s role in climate preparedness and recovery.

Reporting: The Department of Insurance must report results to the Senate and Assembly Committees on Insurance on or before January 1, 2029, and every three years thereafter; reports must comply with Government Code §9795.

Sunset: The article (and program authority) is repealed effective January 1, 2035.

Who is affected

Department of Insurance: responsible for administering grants and reporting.

Vulnerable and disadvantaged communities: intended beneficiaries (expanded insurance access; risk‑reduction projects).

Local governments, community organizations, and agencies that may apply for grants or partner on projects.

Insurers, reinsurers, and the insurance marketplace: potential private‑sector partners and product developers.

State Legislature: provides appropriation and receives periodic program reports.

Fiscal and procedural notes

The bill does not appropriate funds; any grants require future legislative appropriation. The fiscal committee reviewed the bill (fiscal committee: YES).

Legislative actions: introduced 2/21/2025; multiple committee referrals and amendments; passed one committee (Do pass, 4/23/2025) and was re‑referred to Appropriations; held under submission 5/23/2025.

Potential impacts (concise)

Could increase insurance availability and affordability in targeted areas through piloted products and pooled/community mechanisms.

May accelerate nature‑based and regional risk‑reduction projects if paired funding is coordinated.

Outcomes depend on legislative appropriation, program design, and insurer participation; program authority expires in 2035.

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