As the West burns, insurance companies are abandoning their customers like never before. – InsuranceNewsNet

The mathematical premise for insurance companies is relatively simple. They estimate the chances of a customer having to file a claim and how much the company would then pay those customers. They calculate a premium – what the insured customer pays – and expect the premiums of all their customers to be more than enough to cover claims. If you’re risky, they raise your premiums, and if you’re too risky, they drop you.

But amid years of massive fires and an ever-worsening climate crisis, the formula is changing (see story, p. 8). Debbie Jones is a Salinas-insurance broker with Leavitt Group, and it has seen an unprecedented number of customers get kicked out of their insurance policies entirely. “I’ve been doing this for 44 years and I’ve seen so many things, but nothing like it,” she says. “It’s been a really tough road with the insurance for the last five years, but it’s been really bad for the last two years.”

From January 26, she’s considering 10 new non-renewals for clients, many of whom have been with her for decades. Some of them choose to self-insure — talk of the industry to skip insurance altogether — and some get policies through the California FAIR Plan, a pool of all licensed insurers nationwide. the state. California, developed to provide term insurance for those who cannot purchase traditional insurance. “[FAIR] is a last resort,” Jones says.

FAIR comes with its own set of challenges – it’s not cheap, and it’s capped at $3.3 million by policy. A property that was recently forced onto the FAIR plan is Rancho Cieloa youth-serving non-profit residential campus, located on the northeast outskirts of Salinas on county property. “Rancho Cielo has buildings that are worth more than $3.3 millionand we are not happy,” says Don Chapin, Member of the Board of Directors. “It’s not enough and we have to do something better.”

Chapin also lives in the wild-urban interface (WUI for short, pronounced woo-ee) on Crazy Horse Canyon Road in Prunedale, and feels lucky to have had the same insurance company for over 30 years. But as president of North Monterey County Fire Protection District advice, he knows it’s unusual. “If you’re buying a new house here, fire insurance is definitely something you need to be concerned about,” Chapin says.

One of the Joneses Prunedale customers face a premium increase of approximately $890 for $9,400 – for a prefabricated house.

She is also sensitive to the needs of insurance companies, noting that they have been hit hard by the waves of California forest fires year after year. But she is one of many industry players who are frustrated with the tendency of insurers to use a broad brush to determine a structure’s risk. (For more on this and specific ways WUI owners are trying to reduce risk, see by David Schmalz story p. 14.)

“They’re not looking at the individual home, they’re looking at Google Earth, geography, proximity to fires,” Jones said.

A hazard map created by the California Bureau of Emergency Services shows fire risk in red and yellow samples across the region, with purple stripes along fault lines and blue bands representing flood risk along rivers – it’s like a work of art modern art with almost no untouched area.

The only areas that are not affected are urban areas which are largely paved. Properties like Rancho Cielo may not be in a forest or chaparral field, but they are located in WUI, areas outside of cities.

Jones customers who lose their fonts are not in remote locations, but in more developed parts of the WUI. They are near Carmel High Schoolin Monterey along Highway 68 – places that we consider “in town” because they are population centers, but places that for an insurance company are too risky to insure.

They are too risky because we have built communities in the WUI – in beautiful places among trees and nature. I wonder if the private insurance industry will force us to radically change our development planning policies where the government has not.

Jones works with clients who built their dream homes decades ago, when the climate crisis was a thing of the future. But, she adds, “People are still building. Whose fault is it now?”

It may be the insurance companies that will force us to expand only in more sensitive areas in the future.

SARAH RUBIN is the publisher of the weekly. Join her at [email protected]

Kristan F. Talley