California is making moves to stabilize the shaky insurance market.
A San Diego Cal Fire firefighter monitors a flare up on a the head of a wildfire , off of High Road above the Sonoma Valley, Wednesday Oct. 11, 2017, in Sonoma, Calif. A wind shift caused flames to move quickly up hill and threaten homes in the area. Three days after the fires began, firefighters were still unable to gain control of the blazes that had turned entire Northern California neighborhoods to ash and destroyed thousands of homes and businesses.
Some insurance companies — including Allstate and State Farm — stopped writing new policies in California and ended some existing coverage after facing huge damage claims in recent years, particularly from wildfires. Scientists say wildfire intensity has increased throughout the western United States and attribute that to climate change. There’s general agreement that has resulted in claims that have been outpacing premiums collected by insurers.
Florida residents, for example, pay an average of $3,340 a year for a homeowner’s policy, according to the Insurance Information Institute, while for Californians it’s about $1,300. Reinsurance costs and what residents have done to protect their homes against wildfires would also be factored into premium calculations.
“But I’m concerned that we’re not going to be able to rate our way out of this problem,” he said in an interview with. “. . . In the long term, likely to be overwhelmed by the increased risk and losses driven by climate change.”
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