Record Breaking Wildfire Costs
Sacramento, CA – A staggering $12 billion in insurance claims for the November wildfires in California is making them the most expensive in state history.
Insurance Commissioner Ricardo Lara released that figure Wednesday, which is up about $600 million from data released just this January. The record amount covers the fire that destroyed the town of Paradise and two Southern California blazes. Most of the damages relate to the Paradise fire, which killed 85 people and destroyed nearly 19,000 buildings.
“While last year’s tragic wildfires turned thousands of people’s lives upside down, insurance is helping to rebuild and recover,” Lara said in a news release during Wildfire Preparedness Week.
In the past two years, California experienced some of its deadliest and most destructive wildfires in its history as sweeping fires in late 2017 had been the most expensive, with claims topping $11.8 billion. The increasing destruction is making it harder and more costly for people to obtain homeowners insurance.
“Wildfire has long been part of California’s landscape and insurers understand that California faces major wildfire risk,” said Nicole Mahrt-Ganley of the American Property Casualty Insurance Association, which represents about 60 percent of the nation’s property casualty insurance market. “Insurers are still operating in this competitive and stable insurance market.”
Earlier this year, Lara noted that the insurance department had started collecting data on policy non-renewals to better assess patterns and locations where coverage is being dropped. When insurers decline to renew policies, state law requires them to notify customers about other options. The state has a pooled insurance plan of last result known as the “FAIR plan.”
Lack of insurance is an issue California lawmakers are grappling with including ways to address the cost and destruction of wildfires. One legislative proposal would create a fund for catastrophic wildfires that utilities, insurers and underinsured people could tap to help pay for damages. Additionally, legal and financial experts hired by Governor Gavin Newsom suggested a fund as big as $40 billion to help cover costs, but some fire experts advise that if wildfire losses continue to be as large in future years, a $40 billion fund would not be enough.
