(Editor’s Note: The California Department of Insurance issued data that disclosed over four years, over 340,000 homeowners were dropped by insurance companies. in high fire risk areas. According to a Sacramento Bee article covering the issue, “The non-renewals increased by 6 percent last year, translating into 88,187 homeowners forced to find replacement coverage in 2018 alone — often at much higher prices.” In response to the data release, Mark Sektnan, vice president for the American Property Casualty Insurance Association (APCIA) and Rex Frazier, president of the Personal Insurance Federation of California (PIFC) issued the following reaction in a press release.)

“Recent data released by the California Department of Insurance shows a slight increase in the number of homeowners policies being non-renewed in the areas impacted by recent wildfires and in those areas with the highest risk of devasting wildfire.   The data, however, does not address the most important question — was the homeowner able to obtain insurance from another carrier? The data shows that in high-to-moderate areas the non-renewal rate has held steady at 2% (2.1% in 2015; 2% in 2016; 1.9% in 2017; 2% in 2018).  For new policies, we see that carriers continue to write a significant number of policies in these areas.

“The data is clear. 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. 

“As we face this new normal, we need to monitor how years of repeated wildfires are impacting communities at risk including the challenges of obtaining homeowners insurance.  Underwriting profits from 2001 to 2016 were almost completely wiped out by the fires in 2017 alone – with insurers paying out more than $2.00 for every $1.00 collected in premium. Insurers have to manage the risks they cover, and some insurers may leave areas while other insurers may start writing in these areas.

“While seeking solutions, we need to understand that California already has a tool to ensure homeowners can obtain insurance – the California FAIR plan.   We also need to protect against long-term impacts on insurance availability.

“California has been through this before, and we are fortunate our state legislature had the foresight to create a home insurance safety net through the FAIR Plan. No matter where you live, every homeowner is guaranteed coverage.”

“In the past year, the California Legislature has enacted new consumer protections to help consumers recover.  One key measure included the development of an insurance finder tool which consumers can access to find companies writing in their local area.  This program, currently being developed by the California Department of Insurance, is modeled after a successful pilot project in El Dorado County.”