Let’s hope the CEOs have security detail…
My favorite is the map bouncing around Linkedin of non renewals because of climate change but apparently GA is immune. It’s mostly a map highlighting the regulatory failures of FL and CA that they’ve blamed on climate change.
There’s certainly an element of regulatory problems in that map, but it’s much more complicated.
For GA, it doesn’t hurt that the state hasn’t had a major landfalling hurricane since the 19th century. States like NY, RI, and CT have been hit more recently than that.
I am not sure what’s up on OK, but that’s one of the stranger ones compared to neighbors.
I think the main point though is climate change is certainly something insurers can price for. Non renewals related to hurricanes or wildfires are more typically because those insurers have been restricted in what they can charge, not them concluding climate change makes property uninsurable (unlike something like pandemics or terrorism)
Point of clarification: I’ve had to opportunity to work with some of the actuarial types at the CA DOI. Most of them are actually reasonable and understand the plight of most insurers trying to write in CA, but their hands get tied with the following:
State laws that dictate how ratemaking is to be done . . . including how rating models are to be constructed
Career politicians as Insurance Commissioners that often add to the above by promulgating some very specific regulations (often just as binding as the laws) that further restrict how the actuarial types can function
CA laws also allows consumer watch-dog groups to intervene in any filing to further investigate and push back on any rate filing affecting a personal lines product before that filing becomes effective (CA is the only state in the US with this provision in their laws).
For additional context for some of the younger folks, other states (specifically, NJ and FL) have attempted similar “pricing” enforcement with the result that State Farm made the decision to exit the market in those states. The impact after this started was that fewer consumers could find coverage and the state’s residual market ended up being the #1 insurer for those states.
For further context, an insurer exiting a market isn’t one where they completely pull out all at once. It happens in a gradual process where the insurer stops writing new business and then non-renews a percentage (like 10-15% of policy count) of its current book until it gets to a certain volume (like 10k, not sure of the exact number) when it can then exit entirely.
Tornadoes and hail. Also maybe pit bulls.
Sure, but why is the change so extreme compared to neighboring counties in bordering states that have the same exposure. That’s what I was referring to.
The map in question
Idk. It does seem like it might be more uniform—maybe with differences is rural vs urban.
I wonder if the areas with the higher rates are those that had the most storms when building supplies were so inflated during the pandemic?
Are P&C insurers trying to recoup costs in a county by county basis or on a statewide basis?
Looks like CA is having some lovely wildfires. Still want to take the commissioner’s deal?
The timing couldn’t be more perfect.
Apparently it’s hitting celebrity homes.
This article is a few years old, but topical:
They Know How to Prevent Megafires. Why Won’t Anybody Listen? — ProPublica?
Academics believe that between 4.4 million and 11.8 million acres burned each year in prehistoric California. Between 1982 and 1998, California’s agency land managers burned, on average, about 30,000 acres a year. Between 1999 and 2017, that number dropped to an annual 13,000 acres.
That’s a big difference. When Captain Cook sailed up the East coast of Australia his crew were wondering why the silly natives were starting spot fires all the way up the coast. Not so silly, after all.
The same happened in California -
The war-on-fire mentality found especially fertile ground in California, a state that had emerged from the genocide and cultural destruction of tribes who understood fire and relied on its benefits to tend their land.
More ominous: the incentives to put out fires, and to light them in the first place:
The paydays can turn incentives upside down. “Every five, 10, 15 years, we’ll see an event where a firefighter who wants [to earn] overtime starts a fire,” said Crystal Kolden, a self-described “pyrogeographer” and assistant professor of fire science in the Management of Complex Systems Department at the University of California, Merced. (She first picked up a drip torch in 1999 when working for the U.S. Forest Service and got hooked.) “And it sort of gets painted as, ‘Well, this person is just completely nuts.’ And, you know, they maybe are.” But the financial incentives are real. “It’s very lucrative for a certain population of contractors.”
Looks like it’s improving, although I’m not sure what “treat” means
California officials treated more than 700,000 acres of land for wildfire resilience in 2023,
Another website mentioned 6 to 9 million acres that need to be treated, so not out of the woods yet.
not out of woods yet.
Fire took out this Woods.
CNBC has a couple of insurance CEOs on, talking about the LA wildfires.
They have NOT been shy about giving grief to the CDI.
They also haven’t been good at responding to questions of “why have wildfires gotten so bad”.
EDIT: Video of the interview: Reinsurance expected to be available to companies on ground in CA, says incoming USAA CEO Andrade
Calfire prescribed burned a whopping 36,000 acres in 2023, just a tad short of the 1,000,000 that the experts in the article above mentioned!
Is suspect they are likely to have to go back to the drawing board on that one.
They have clearly under-priced the risk and no company will take on such losses for very long.
