Wildfire risk has evolved. How can underwriting keep up?
Pathpoint CRO and President Ralph Blust shares his expertise on how the increase in destructive wildfires has shifted the market, and why it’s driving insureds to the E&S space.
According to the NOAA, in 2021, there were 58,733 wildfires in the United States, which burned over 7 million acres. As you can imagine, increasing wildfire risk has caused premiums to skyrocket for many homeowners in wildfire-prone areas. The problem has become serious enough that in October, the California Department of Insurance mandated discounts for insureds who engage in wildfire risk mitigation.
As climate change continues to drive wildfire issues, we’re seeing a shift in the wildfire insurance marketplace, with many insureds in wildfire-prone areas turning to the Excess and Surplus (E&S) market to combat rising premiums.
Ralph Blust, CRO and President of digital E&S brokerage Pathpoint, has over 35 years of insurance expertise and experience, and he joined us for this week’s episode of Insurance Speak to discuss how the wildfire insurance marketplace has shifted over the last several years, and how it can avoid falling into the same hardships as Florida’s insurance market.
“Wildfires in the past were far more focused in rural areas, and the biggest change, and the profound change that’s happened very, very fast, has been that wildfires are happening in metropolitan areas… Entire towns are getting wiped out in California. Wildfires are happening the suburbs of Los Angeles,” Blust explained.
“So, the biggest change is that it’s going from areas where a wildfire would occur in the middle of a national forest, to where you have high population densities, and the drought conditions, as they become profound further west, have encouraged those fires to happen in smaller, isolated areas,” he continued.” A 500-acre wildfire was not something that was very prevalent in the past, where now they’re happening on a very frequent basis.”
To hear more of our conversation about the evolution of wildfire risk, listen to the podcast above or subscribe to Insurance Speak on Spotify, Apple Music or Libsyn.