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California wildfires ignite an insurance crisis – Press Telegram

Permanent wildfires in the state cause millions of homeowners in fire-prone areas to pay soaring premiums for insurance coverage, as if California needed another crisis I have been forced to do that.

As the number and severity of wildfires increases, insurers are becoming more and more reluctant to renew their insurance policies, and even if they do, premiums often double or triple.

Most homeowners need insurance because their mortgage lenders demand it. And if they can’t get regular coverage, they are forced by FAIR’s insurance company, which is a last resort with very high premiums and limited coverage.

Insurance Commissioner Ricardo Lara repeatedly enforced a law he created as a member of the state legislature three years ago, imposing a one-year moratorium on the cancellation of insurance contracts for a large fire scene or the property next to it.

In 2020, after a fire burned more than 4 million acres and burned hundreds of homes and other buildings, Lara’s moratorium targeted 2.4 million policyholders. When this year’s fires are finally extinguished, such as the giant Dixie fire and the Caldor fire that almost wiped out South Lake Tahoe, Lara extends the moratorium to burn areas.

But at best, such a moratorium is only temporary. So what are politicians doing about the crisis? Most of the time, they seem to be scapegoats.

This month, fire-prone Democrat Mark Levine of Marin County fired a letter to insurance industry groups, saying: It was whimsically handed over to my members in the form of homeowner’s insurance being denied, not renewed, and premiums being exorbitantly raised. Especially when there is no change in conditions or situations. “

The situation is also beyond the control of the insurer, as the insurer assesses the potential loss and calculates whether to provide coverage and, if so, what to charge. As Levine suggests, the danger cannot be ignored regardless of the cause.

Veteran insurance industry lobbyist John Norwood addresses the dilemma in a recent article in an industry publication.

“California’s real estate insurance availability and affordability are demonstrable that the global reinsurance market believes California is taking the risk of wildfires seriously and reduces the number and severity of wildfires in the state. It won’t change until you get good results.

“Without a reinsurance market to support California non-life insurers, the state continues to face a crisis of non-life insurance availability, and the price of such compensation is significant to damage California homeowners and businesses. Will continue to rise. “

The initial state budget, signed by Governor Gavin Newsom, allocated $ 2 billion to make the state more fireproof, but was criticized for spending billions more on low-import issues. rice field. Last week, with the big fire still burning, the wildfire budget surged before the state legislature postponed it that year.

Reducing the potential for catastrophic fires is a good step in the right direction, but the insurance crisis demands more — perhaps even a whole new approach.

California wildfires ignite an insurance crisis – Press Telegram Source link California wildfires ignite an insurance crisis – Press Telegram

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