As Wildfires Get Worse, Insurers Pull Back from Riskiest Areas

Insurers are quietly reducing their exposure to fire-prone regions across the Western United States, putting new pressure on homeowners and raising concerns that climate change could eventually make insurance unaffordable in some areas.

Officials in California, Washington, Montana, and Colorado are getting more complaints from people whose insurance companies have refused to renew their coverage.  The complaints follow years of record-setting wildfires in both size and cost, a trend that scientists expect to continue as global warming accelerates.

“I think that we are not far away from a lot of weather-related events being too expensive for most people to purchase comprehensive coverage,” said Carolyn Kousky, executive director of the Wharton Risk Center at the University of Pennsylvania.  “What happens then is the big question.”

On Tuesday California’s Department of Insurance issued a report quantifying that pullback.  For the ZIP codes most affected by the wildfires in 2015 and 2017, the number of homeowners dropped by their insurance companies jumped 10 percent between 2017 and 2018.

In the 10 California counties with the most homes in high-risk areas, the number of homeowners’ policies written by major insurers, whose rate increases must be approved by state regulators, fell by 5 percent between 2015 and 2018, the department said.

Another way of measuring the growing reluctance of insurers is the increase in demand for the state’s FAIR plan, which is effectively prohibited from turning away customers but typically charges higher premiums as a result.  In those same 10 highest-risk counties, the number of homeowners getting coverage through that plan increased 177 percent while staying flat statewide.

Read more at As Wildfires Get Worse, Insurers Pull Back From Riskiest Areas