Homeowners could continue losing insurance as wildfire threat looms
Almost a year to the day after evacuating during the devastating
Her two-bedroom house in the
“It was just like adding insult to injury,” Osborn said. “It triggered a whole lot of memories and fear.”
Following a string of destructive and deadly fires in 2017 and 2018, insurance companies have ended coverage for tens of thousands of
Now, heading into what could be the worst of this year’s fire season, many more homeowners may soon be in jeopardy of losing their policies.
“It’s that time of year, and here we go again,” said Osborn, who eventually found new private coverage for the home she’s owned since 1985.
In response to growing uncertainty in the insurance market, the state has imposed new wildfire regulations in recent years aimed at bringing down costs and protecting homeowners. But the insurance industry has pushed back hard against the reforms, arguing the state should instead overhaul how it regulates policy rates to account for more frequent catastrophic fires.
“Risks are getting worse, and rates are going to have to go up to ensure insurers are solvent and operational in California,” said
In 2018, former Gov.
Insurance companies, which manage and fund the state-created FAIR Plan, have challenged the regulation in court.
And later this year, the state insurance department is expected to begin requiring that providers offer lower rates to homeowners who fireproof their homes.
While consumer advocates have cheered the new rules, some in the insurance industry worry they could lead to providers scaling back their presence in the state even further.
“If (Commissioner Lara) reaches too far, and he already has several times, insurance companies will just say, ‘We’re leaving
Early this year, high-end home insurers
“We have a strong insurance market statewide, even with massive wildfires we’ve seen over the past few years,” Soller said.
In 2020, insurers ended coverage for over 212,000 properties in
That was a slight increase from 2019, but more than triple the number of new FAIR Plan policies in 2018.
To reverse that trend, insurance companies argue they must be allowed to set rates based on the wildfire risk caused by the climate crisis. The industry wants to use computer models to predict future fire danger and guide the approach to policies.
That would increase premiums, but it would also enable insurers to write policies for more high-risk areas and drop fewer homeowners, insurance companies say.
“We’re dealing with regulations that say we can only look backward and we can’t look forward,” said Taylor, with the
The state insurance department — which under a voter-approved 1988 law called Prop. 103 must sign off on changes to insurance companies’ policies — currently requires insurers to determine rates based on historical damages. Providers have been able to raise rates in recent years, but they contend it’s not enough to shield their risk.
State insurance officials and consumer advocates say changing that policy and allowing so-called “catastrophe modeling” could unfairly raise rates for homeowners through an opaque and potentially discriminatory process.
“The insurance companies have been claiming ‘we need to use algorithms to set insurance rates,’” said
With seemingly no resolution on the horizon, that could mean more lost policies and rising premiums in the years ahead.
Despite the increased cost and growing wildfire threat, he has no plans of moving his family from the area.
“I’m not scared off,” he said. “I know there’s high risk, but there’s high risk in many areas of California.”
wildfires California homeowners face wildfire threat Insurers argue the state should update rate regulations to account for more frequent catastrophic fires
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