People in California are having a difficult time obtaining proper fire insurance policies, and the industry is starting to notice. California’s top insurance regulator recently vocalized the issue, stating that insurers are increasingly refusing to offer homeowner’s policies that include a fire provision in areas of the state that are prone to wildfires. Given the record-setting fires that swept the state in 2017, this is, unfortunately, a problem that is not likely to go away anytime soon. In fact, it might get worse before it gets better.
The California Department of Insurance (CDI) found that between 2010 and 2016 there was a 249% increase in consumer complaints related to policy renewals, particularly in zip codes that are known to be at the greatest risk of wildfires.
Insurers are increasingly using computer models to assess the risk of fires for individual homes and deciding that homes in some areas face too high a risk,” says California Insurance Commissioner Dave Jones in a press release about the problem.
Currently, California has 1.3 million homes that have been deemed by insurers to be at a “high” or “very high” risk of for fire.
Mark Sektnan, vice president of state government relations for the Property Casualty Insurers Association of America spoke with U.S. News about this problem, pointing out that “It’s too soon to tell what kind of impact the current fires are going to have on the insurance market, so I’m not sure we can necessarily say there is an availability crisis. Some companies may decide not to write (policies), but other companies…are actually moving into the market.”.
If 2017 taught us anything it’s that wildfires are going to continue to be a major problem for California and the insurance market is simply going to have to adapt. Unfortunately, that means that some consumers are going to have to shoulder the cost for a while.