SACRAMENTO, CALIFORNIA: New California data indicates insurers refused to renew close to 350,000 homeowners policies in areas at high risk for wildfire since the state started collecting data in 2015.
The information revealed this week did not precisely mention how many residents who lost their insurance were able to get it elsewhere or how much more it cost. It also indicated the overall new and renewed insurance policies rose in fire risk zones during the same period.
Loss of home insurance or skyrocketed premiums are among the consequences of California’s life-threatening and destructive wildfires in recent years.
California did not collect the same data before 2015, making it hard to get a broad view of changes in the state’s home insurance market. Nevertheless, homeowners and regulators alike say they are concerned about the effect of catastrophic wildfires on homeowners.
Joel Laucher, an insurance department consultant, told legislators on Wednesday that insurance firms are requesting premium spikes “in record numbers.” The department received 25 requests for rate hikes in 2015, while they handled 69 requests in 2018, with even more requests expected this year.
However, the insurance sector found the number of non-renewed policies remained fairly constant year-over-year and said many firms are still issuing policies in high-risk fire regions.
“Insurers remain committed to covering homes in rural and urban zones, despite paying out more than $26 billion in claims from the 2017 and 2018 wildfires. Those claims payments will rebuild and revitalize these communities,” Rex Frazier, president of the Personal Insurance Federal of California, and Mark Sektnan, vice president for the American Property Casualty Insurance Association, said in a joint statement.
The data additionally shows 33,000 policies were not renewed by insurance companies in areas affected by major wildfires in Calaveras and Lake Counties in 2015, in Santa Rosa in 2017, and mudslides in Southern California in the beginning of 2018.
The data does not include non-renewals resulting from disastrous fires in Redding and Paradise last year, making insurance regulators to warn non-renewals could go even higher in 2020.
Total new and renewed policies dropped in the 10 counties with the most homes in high-risk fire zones across the four-year period, indicated the data.
“This data should be a wake-up call for state and local policymakers that without action to reduce the risk from extreme wildfires and preserve the insurance market, we could see communities unraveling,” state Insurance Commissioner Ricardo Lara said in a statement.
Governor Gavin Newsom said he’s working with the commissioner on short- and long-term solutions to fight the problem.
“This has been a trend line as you know for the last four, five years. Last year was accelerated,” Gov. Newsom told reporters. “We’ve got to address it.”
Some non-renewals were initiated by policy holders and not insurance firms, according to the data, but the insurance department does not have information on why folks choose not to renew their policies, spokesman Michael Soller said.
Many people in high-risk fire areas are now purchasing policies via the FAIR Plan, a state-created plan that promises insurance access even to those in high-risk fire areas. Still, coverage for now non-renewals are also somewhat high for people on those programs.