Calif. Department of Insurance finds insurance is harder to find after wildfires
The department has found that insurance is becoming harder to find for those in high wildfire-risk areas as a result of recent wildfires.
The California Department of Insurance (DOI) has found that insurance is becoming harder to find for those in high wildfire-risk areas as a result of recent wildfires.
The DOI said that data provided by insurers revealed that there was a 6% increase in insurer-initiated homeowner policy non-renewals in Cal-Fire State Responsibility Areas (SRAs) from 2017 to 2018, while zip codes affected by the fires from 2015 and 2017 experienced a 10% increase in insurer-initiated non-renewals last year.
SRAs are areas where the California Department of Forestry and Fire Protection is responsible for the prevention and suppression of wildfires, which excludes lands within city boundaries or in federal ownership.
“We are seeing an increasing trend across California where people at risk of wildfires are being non-renewed by their insurer,” said Insurance Commissioner Ricardo Lara.
“I have heard from many local communities about how not being able to obtain insurance can create a domino effect for the local economy, affecting home sales and property taxes. 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.”
High-risk counties see drop in availability of homeowners’ insurance
The data provided by insurers also revealed the availability of homeowners’ insurance dropped in high-risk counties. From 2015 to 2018, the number of new and renewed homeowners’ policies fell by 8,700 in the 10 counties with the most homes in high or very high-risk areas.
These same counties saw a steady increase in new FAIR Plan policies during that time, growing 177%, compared to only a 4% increase for the five counties with the lowest risk. The FAIR Plan provides insurance coverage as a last resort for homeowners unable to find coverage in the voluntary market.
According to the DOI, nearly 57% of new FAIR Plan policies now are written in SRAs, up from 47% in 2015. The DOI added that there has been a 49% increase in surplus lines policies in SRAs between 2015 and 2018.
The DOI said that the new data did not measure the full impact of non-renewals of homeowner policies linked to the 2018 wildfires, including the Camp, Carr, and Woolsey/Hill fires. It explained that because California law requires insurers to give a 45-day notice before a non-renewal and these wildfires occurred near the end of the year, the effects of these fires on the insurance market would likely appear in 2019 and possibly beyond.
The DOI’s analysis was based on responses from insurers representing 98.3% of the voluntary homeowners’ market in California from insurers that wrote $5 million or more in premium in 2018.
More information can be found in the DOI’s report, Fact Sheet: Impact of Wildfires on Insurance Non-Renewals and Availability.
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