Destabilized Climate Now In The Driver's Seat: CA Fire Insurance Market "Has Largely Collapsed"

As wildfires burn homes across California, the state is also grappling with a different kind of climate predicament: How to stop insurers from abandoning fire-prone areas, leaving countless homeowners at risk.

Years of megafires have caused huge losses for insurance companies, a problem so severe that, last year, California temporarily banned insurers from canceling policies on some 800,000 homes in or near risky parts of the state. However, that ban is about expire and can’t be renewed, and a recent plan to deal with the problem fell apart in a clash between insurers and consumer advocates.

Insurers are widely expected to continue their retreat, potentially devastating the housing market if homes become essentially uninsurable. “The marketplace has largely collapsed” in those high-risk areas, said Graham Knaus, executive director of the California State Association of Counties, which has pushed state officials to address the problem. “It’s a very large geographic area of the state that is facing this.”

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The problem has become so bad that the state’s insurance commissioner, Ricardo Lara, last December banned companies from dropping people in or near ZIP codes struck by recent wildfires, calling the situation a “crisis.” The move, which covered at least 800,000 homes around the state, marked the first time his office had used that authority. The ban was never meant to be a permanent fix. It lasts just 12 months and can’t be extended. And data suggests that insurers have continued to drop customers. The number of households buying coverage from California’s high-risk insurance program, a costly and bare-bones alternative for people who can’t get private coverage, has increased by more than 50 percent between the start of 2019 and June 2020, to almost 200,000 households.

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https://www.nytimes.com/2020/09/02/climate/wildfires-insurance.html