The devastating wildfires plaguing Southern California for over a week are expected to exacerbate the existing property insurance crisis in the state. Experts predict further premium hikes and coverage reductions from major insurance companies due to the immense scale of potential losses.
The wildfires ravaging Southern California for over seven days could exacerbate the ongoing property insurance sector crisis in the state, leading to further premium hikes and coverage cuts from major companies, according to experts.'The fires will push the crisis to a new level, with likely FAIR plan assessments on both insurers and their policyholders,' Dr. David T. Russell, Professor of Insurance and Finance at California State University, told Newsweek.
As these changes allow for the inclusion of higher reinsurance costs, 'it's reasonable to expect that reinsurance rates themselves will rise to accommodate the heightened risk level,' Saliba added.'At the same time, as insurance premiums rise, some insurers may still choose to withdraw from high-risk areas. This could lead more people to depend on the California FAIR Plan, which typically costs more and offers less coverage compared to private insurance.
Insurance Natural Disasters WILDFIRE INSURANCE CALIFORNIA PREMIUM HIKES COVERAGE CUTS
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