California Insurance Commissioner Dave Jones seeks new laws to protect homeowners after wildfires
Jones called for quick action, noting 3.6 million
In
In counties designated with the highest fire risk, his office saw a 15 percent increase in non-renewals by insurers last year, Jones said. Some policyholders, meanwhile, have complained their annual premiums have gone from
"We have a major problem here in
"That's what I'm concerned about as those models are updated based on the fires that occurred," Jones said.
The October fires have resulted in about
Policyholders whose homes were destroyed in the fires will still be able to renew their coverage for at least one additional year as mandated under state law. Jones noted "there will be some impact" on whether insurers will continue to write policies in areas that were significantly burned during the recent fires.
Carriers are reassessing their appetite for risk in the aftermath of fires, though some may see opportunity for providing coverage, said
"As some companies move out, some companies will move in," he said.
Local homeowners should not see a massive price spike in their next renewal, Jones noted, as state law requires that insurers recoup their losses in a major disaster over a period of at least 20 years.
"There will be some rate impact," he said. "It's too early to say how much."
The recent wildfire outbreaks have placed a greater reliance on the state's nonprofit insurer of last resort, the FAIR plan, which provides structure coverage solely for fire and smoke damage. The FAIR plan had 121,516 homeowner policies in 2016 as a result of a spike from new policyholders who could not obtain insurance elsewhere in high-risk areas.
Jones called for legislation to spur insurers to offer more coverage in high-risk areas if the homeowner makes efforts to mitigate potential damage by wildfire, such as creating a vegetation-free buffer zone around the house. If carriers opt out of such fire coverage, Jones said they should have to offer a policy that would supplement the FAIR plan for such items as theft and liability that are part of an overall homeowner package.
Carriers also should have to obtain state approval for the wildfire modeling they conduct to set premiums and allow for an appeal process if a policy is denied, Jones added.
Jones predicted that he will face some opposition from the industry. "Historically, the industry has fought hard against consumer protection proposed by the state insurance commissioner," he said.
The industry was withholding comment on the proposals until it reviews bill language, said Sektnan. He added that his companies "stand ready to develop workable solutions that do not disrupt
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