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Home / Insurance / Triple-I-blog | Battling Fires, California also fights to keep homeowners insured

Triple-I-blog | Battling Fires, California also fights to keep homeowners insured



The Los Angeles Office of the National Weather Service predicted prolonged, potentially record-breaking and dangerous weather conditions throughout California this summer – and some experts expect it to continue for some time.

"If you like 2020, you will love 2050," says Michael Gerrard, director of Columbia University's Sabin Center for Climate Change Law, in a recently published Los Angeles Times article.

These conditions can only exacerbate this year's atypical wildfire activity in the state, so it should come as no surprise that California is grappling with how to stop insurers from abandoning fire-prone areas and leaving countless homeowners at risk.

"Years of megafires have caused huge losses for insurance companies, a problem so serious that, last year, California temporarily banned insurance companies from canceling insurance on about 800,000 homes in or near risky parts of the state, " The New York Times reports." However, that ban is about to expire and can not be renewed, and a new plan to deal with the problem coincided in a conflict between insurers and consumer advocates. "[1

9659002] Insurers are generally expected to continue their retreat. [19659002] "The market has largely collapsed" in high-risk areas, says Graham Knaus, executive director of the California State Association of Counties. "There is a very large geographical area in the state that is facing this."

California, where the rules lean towards consumer protection, is particularly challenged. The state does not let insurers set premiums based on what they expect in future claims. They can only set interest rates based on past losses. They are also not allowed to pass on reinsurance costs to policyholders – costs that are expected to rise as fire risks worsen.

State legislators introduced a bill to allow insurers to write coverage in areas exposed to wildfires to incorporate climate forecasts and other costs into their price inquiries in exchange for making coverage more accessible and offering discounts to people taking measures to reduce their homes. vulnerability. But the bill met strong opposition from consumer groups, which ultimately won. Last month, the state senate removed most of the provisions from the bill and called on the insurance commissioner to review the current rules and report back to the legislature in two years.

The legislator ended its session without acting on the revised version. Insurance Commissioner Ricardo Lara said that his focus now is to work with high-risk groups to reduce the risk of wildfires so that insurers will continue to offer coverage without large interest rate increases.

"If the Californians do our part to protect homes from wildfires," Lara said. , the industry should respond by agreeing to insure these homes.

Janet Ruiz, Triple-I's Head of Strategic Communications, said, "California insurers are working with lawmakers and the California Department of Insurance to find solutions to keep homeowners insured in fire risk areas. The industry supports mitigation efforts, California's FAIR plan and the proposed IMAP program.


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