by Amy Bach

 

Generally speaking, home insurance companies are free to pick which homes they want to insure and which they don't.  There has been an explosion in tech tools that insurance companies can use to assess risks and decide who and what they are willing to insure and how much they will charge to sell policies and meet their business goals.  Drones, GPS technology, data mining, artificial intelligence and predictive analytics are making it easy for insurance companies to be far more calculated than they had been about their decisions on the types of buildings, people and locations they will insure.  Fear of the impact of climate change is compelling insurers to aggressively use those tools.

Pro-active steps to keep home insurance available and affordable include programs like the Match UP Insurance Finder that help consumers look in all corners of the market to find coverage options, legislation and regulations that limit insurance non renewals. and programs that help property owners fortify their homes and make them more attractive risks to insure.  

The combination of the increased availability of data-driven tools and algorithms plus severe, destructive wildfires in recent years does not bode well for home and business property insurance consumers in wildfire prone states, just as a similar scenario reduced options and raised prices in hurricane prone states like Florida and Mississippi. After hurricanes Charley, Katrina and Wilma blew through Florida, the options for insuring your property at an affordable rate in the private market all but dried up and there was a crisis. State government had to take creative action to restore a competitive marketplace.  Recently, in the aftermath of Hurricane Michael, the Florida Office of Insurance Regulation issued an emergency bulletin limiting insurance non-renewals to stop a wave of non-renewals and avoid a repeat of that earlier crisis.  Pro-active steps...

With the wildfires and ever-expanding technological tools, conditions in California are somewhat similar. There has been a great deal of discussion, and largely anecdotal evidence that many insurers are withdrawing from high fire risk areas. According to data from the CDI, more than 10,000 homeowners in high risk counties were non-renewed by their insurer in 2016. More than 36 thousand homeowners in those counties chose to not renew their policies, however, presumably because of steep premium increases or lower coverage reasons. The data does not detail if these homeowners subsequently found insurance with other insurers, although there has been little policy growth to date in the homeowners’ insurer of last resort—the Fair Access to Insurance Requirements Plan.

United Policyholders and insurance regulators in a number of states are working hard to pro-actively keep a competitive private home insurance market, despite the problematic conditions described above (drought plus wildfire severity plus risk assessment technology plus climate change). 

UP helped enacted legislation in California in 2018 that gives people who lose homes in wildfires and their neighbors a measure of assurance that their insurer cannot drop them right away.  Disaster survivors get two renewals, their neighbors get one.  It's a start...

 

About The Blogger

Amy Bach

Amy Bach has been a professional advocate for insurance policyholders since 1984 and an attorney since 1989. She co-founded United Policyholders in 1991 and serves as the organization's Executive Director and primary spokesperson; shaping and overseeing the Roadmap to Recovery™, Roadmap to Preparedness, and Advocacy and Action programs. She is a nationally recognized expert on insurance claim and legal matters; frequently interviewed in print and broadcast media, and the author of numerous publications including "The Disaster Recovery Handbook", "WISE UP: The Savvy Consumer's Guide to Buying Insurance" and consumer tips and guides in the UP Claim Help Library.  Recognized by Money Magazine as a Money Hero, Bach is in her eighth consecutive term as an official consumer representative to the National Association of Insurance Commissioners, and is a member of the Federal Advisory Committee on Insurance.