American Property Casualty Insurance Association: What is Driving the Affordability and Accessibility Challenges for Homeowners Insurance in High-Risk Western States

SACRAMENTO, California, Nov. 3 (TNSres) -- The American Property Casualty Insurance Association issued the following news release:

Communities in wildfire-exposed regions are facing growing wildfire risk and increased losses, resulting in higher insurance costs and less choice for consumers. As more communities face devastation, increased attention is needed to examine the root underlying causes contributing to these problems. The American Property Casualty Insurance Association (APCIA) is publishing a new white paper that closely examines these challenges entitled Wildfire Risk in the Wild, Wild, West: A three-part series focused on identifying the challenges and opportunities affecting consumers and property insurance markets in wildfire-exposed states.

"This series of white papers highlights the underlying issues leading to increased exposure and higher costs that are impacting the affordability and availability of insurance in wildfire-exposed regions, while also explaining the challenges insurers are facing in managing this peril," said Karen Collins, APCIA assistant vice president for personal lines policy. "To help consumers, policymakers must address the underlying issues that are increasingly impacting property insurance markets in wildfire-exposed regions and provide insurers with increased regulatory flexibility and stability to manage growing risk and the true cost of claims. Risk reduction through mitigation is a top priority for insurers, to help reduce losses and protect property, lives, and livelihoods. As more homes and communities are meaningfully mitigated, this should positively impact the affordability and availability of insurance for consumers."

Catastrophic wildfires have left a trail of destruction and devastation across western states, such as California, Oregon, Colorado, and New Mexico. In addition to the tragic loss of lives, which is deeply concerning, the impact on insurers has been significant. Since 2017, eight of the ten costliest insured wildfire events in the world have occurred in California. The losses from 2017 and 2018 alone wiped out over 20 years of underwriting profits for homeowners insurers in California. More recently, losses have been further exacerbated by inflation and supply chain disruptions resulting in higher costs and longer timeframes needed to reconstruct homes and businesses across the U.S. Recent laws passed in several western states that expand coverage benefits available under insurance policies have similarly compounded the overall impact and costs of catastrophic wildfires. However, insurers are facing constraints that are limiting the ability of insurers to respond to increasing catastrophic exposure and claims costs, leaving consumers with fewer coverage options in wildfire-exposed regions.

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PART I: INCREASING Wildfire Risk in the Wild, Wild, West - The evolving conditions resulting in growing exposure in the wildland-urban interface

Link: https://www.apci.org/attachment/static/7103

This paper examines the underlying issues contributing to growing exposure and increasing costs in the wildland urban interface (WUI), which are affecting the affordability of insurance in wildfire-exposed regions.

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PART II: MANAGING Wildfire Risk in the Wild, Wild, West - The growing challenges property insurers face in the wildland-urban interface

Link: https://www.apci.org/attachment/static/7104

This paper examines the constraints and concerns insurers face in managing the peril of wildfire, which impacts both the affordability and availability of insurance for consumers residing in wildfire-exposed regions.

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PART III: TAMING Wildfire Risk in the Wild, Wild, West - The current state of mitigation in the wildland-urban interface

Link: https://www.apci.org/attachment/static/6885/

This paper provides an overview of the challenges related to wildfire mitigation, in addition to highlighting the latest research on wildfire mitigation and key programs.

"Western states are experiencing rapidly evolving environmental conditions that are making them more prone to burn. The intensifying impacts from climate change and drought are enabling fires to ignite more easily and spread more rapidly, resulting in more catastrophic losses," said Collins. "If these growing challenges are left unaddressed, the affordability and availability of property insurance in wildfire regions will continue to pose increasing burdens for consumers. We must work together and focus on ways to reduce exposure and future losses, while ensuring regulatory flexibility that is needed to address these expanding obstacles. Together, these will help protect what matters most - keeping families and communities safe."

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Original text here: https://www.apci.org/media/news-releases/release/73621/