Lloyd and his wife later bought another home in Hidden Valley Lake, a town that has taken ambitious steps to reduce flammable vegetation, but his insurance premium remains more than $4,500 a year, more than triple what it was in his last home in Kansas. Lloyd is worried that his insurance company will increase his price even more under the new rules.
Other Western states, such as Colorado and Oregon, are also seeing gaps in insurance coverage emerge after large wildfires, although their problems are less severe than those of the Golden State. In Colorado, for example, officials recently established a state support for fire insurance like California’s FAIR Plan, since customers have been eliminated en masse in just the last few years. California’s big deal with the insurance industry provides a model for those other states: If coverage gaps are to be addressed, insurers need to be given broader pricing authority.
Even this might not be enough. There has been a respite in recent years from large wildfires like those that occurred in 2017 and 2018, but this week’s fires in the Los Angeles area could cause billions of dollars in damage, on par with an event like the Camp Fire.
Joel Laucher, a former regulator and fire insurance expert at the consumer advocacy organization United Policyholders, said damage from the Los Angeles fires could lead to more price increases and more availability gaps.
“These will certainly be significant losses,” he told Grist. “Certain areas are definitely going to have new challenges, to the extent that insurers will be able to charge the rate they think those areas deserve to pay.” Laucher said insurance companies may not refuse to renew as many policies as they could have under previous state rules, but they could still avoid selling policies in some of the affected areas.
Frazier, of the insurance trade group, expressed similar concerns. He said another round of monster fires on the scale of 2017 and 2018 could drive the state’s insurance industry away once again, despite the commissioners’ reforms.
“If we had a couple more unprecedented years, all bets would be off,” he told Grist.