ST. LOUIS – The harrowing scenes in Los Angeles are burned into our memories. For those who’ve lost everything, it still doesn’t seem real. Many families have no road map to recovery.
“I think we are going to find that many of them had no insurance because their insurance policies were being canceled, and new insurers were refusing to cover them, or it was cost prohibitive,” California Sen. Adam Schiff said.
Several insurance companies left California in recent years, eliminating new policies or reducing their exposure.
Critics blame California regulators who prevented insurers from charging premiums they say truly reflect the risks and the costs of doing business in the Golden State.
According to the California Department of Insurance, between 2020 and 2022, insurance companies declined to renew 2.8 million homeowner policies in the state, including 531,000 in LA County.
Consumer advocates claim it has nothing to do with losing money.
“The fact of the matter is, insurance companies in California, home insurers specifically, are more profitable than the nationwide average,” Consumer Watchdog Executive Director Carmen Balber said.
But the insurance industry says inflation and the high cost of reinsurance lead to higher prices that cannot be capped.
“There are never caps on the insurance costs due to the fluctuating economy, so insurance has to be able to pay out claims,” Janet Ruiz from the Insurance Information Institute said.
University of Missouri finance professor Tim Howald says this could be the costliest wildfire in U.S. history.
“These natural disasters are becoming way more frequent and way more costly,” he said. “JP Morgan today had an estimate on insurance losses of $20 billion. Historically, though, in comparison to the hurricanes in Florida, that’s still pretty small.”
Experts say some Californians home insurance could jump 30 to 40 percent. Rates may also rise in other states as insurance companies try to cover their losses.
“We’re worried people will drop the additional coverages they have, such as flood insurance,” Emily Rogan with United Policyholders added.
Now is not the time to be underinsured, even if you live in an area not known for wildfires or hurricanes, Rogan said.
“You want to make sure that you’re thoughtful about what it does cover and fill those holes if you can,” he said.