"We're Kind Of Teetering" - California Insurance Markets Continue To Destabilize In The Age Of Megafires

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By the time the family moved in, they couldn’t find home insurance with fire coverage. Some companies had already stopped writing new policies for homes in the region, so the couple sought out the Fair Plan, which guarantees coverage but is often more expensive. Their first year came in at around $7,000, they said. Insurance had been an issue in the region in the past, said Doug Teeter, a Butte county supervisor. When he was elected in 2012, there were certain areas of the county where some insurers would pull out, but there was always another provider that would step up, he said. That’s no longer the case.

As California saw increasingly destructive fire seasons – in 2017, the fire siege largely concentrated north of the Bay Area that killed 44 people and destroyed nearly 9,000 structures, and the Thomas fire that destroyed more than 1,000 in southern California; the 2018 season that wiped out 24,000 structures and killed 100 people; the 33 people killed and 11,000 structures lost in 2020; the destruction of Greenville the following year – affordable home insurance in many parts of the state became all but impossible to find.

Rising inflation significantly increased the costs of rebuilding. “The costs insurance companies were facing in terms of reconstruction were going up faster than they could raise rates,” said Michael Wara, a senior research scholar at Stanford’s Woods Institute for the Environment. “The loss was just accumulating and accumulating with not an expectation of an end in sight.”

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And the system itself is not designed to handle a disaster in which 10,000 houses burn down in one night, he said. Last year, State Farm, the largest provider in California, announced it would stop selling new home policies in the state. Allstate, another major player in the state’s insurance market, had made the same announcement months earlier. The insurance market in California right now is highly unstable, Wara warns. “We’re kind of teetering.” Climate crisis-fueled disasters across the US are creating chaos in the industry. In hurricane-prone Florida, insurance premiums have soared, major insurers have stopped writing new policies and residents have been forced to seek coverage through the state’s not-for-profit insurer of last resort.

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https://www.theguardian.com/us-news/article/2024/aug/10/home-insurance-park-wildfire-california-butte-county