Insdustry Responds to Calif. Wildfires

The most devastating wildfires in California history have been fully contained, but the numbers reveal a destruction of staggering proportions: statewide, 740,000 acres have been scorched; more than 3,600 homes and the death toll reached 22. A reported 7,200 claims have been filed thus far.

Despite the catastrophic conditions that lay in the aftermath of the fires, the insurance industry came together immediately to provide assistance to those who lost. Claims adjusters, agents and brokers, Insurance Commissioner John Garamendi, and city and state officials made their way to the affected sites as soon as emergency personnel permitted them. As residents began to trickle back into their neighborhoods, they were greeted with an armada of industry personnel.

Mobile claims units were quickly set up outside of shelters to help those who had lost their homes and those who had been evacuated. “Agents were sitting in their offices, dialing their customers as soon they heard the fire was threatening them, trying to reach them before they evacuated,” Jerry Davies, director of communications at the Personal Insurance Federation of California (PIFC), said.

Many insurance companies placed temporary moratoriums on their homeowners programs. “The temporary moratoriums are sort of a natural thing that is automatically done after a disaster,” Nicole Mahrt, director of public affairs, Western region, for the American Insurance Association, said. “It’s done to protect existing policyholders so that there’s money there to pay their claims. When the imminent threat goes away, those moratoriums usually go away.”

Davies experienced the aftermath in person, when he took a camera crew to the affected sites to film the industry’s response for his television show, Capital Counterpoint. He stopped first in San Bernardino County, where he visited the make-shift evacuation center at the San Bernardino Airport. “When I arrived, there were more than 2,500 people down at the center and they were spread out all over,” Davies said. “I noticed at least eight insurance companies’ mobile vans with huge signs, tables, chairs, and agents and adjusters bringing people in one after the other, and sometimes having three or four tables around one center where they were having multiples of people. First, looking for people who had lost their home, and secondly, helping people who had evacuated.”

In San Diego, Davies saw a similar picture, with insurance companies’ mobile units set up to assist homeowners. “The community building there was filled with FEMA [Federal Emergency Management Association], OES [Office of Emergency Devices], small business administration, fire department, public utilities, gas, electric, and telephone companies. All there in that one giant building. There must have been at least a thousand people.”

While Davies acknowledged the tremendous efforts on behalf of the agents, he stressed that many homeowners were not and still aren’t aware that their insurance policy affords dollars for them to get into temporary housing. Davies urged all policyholders to contact their agents for information on their coverage.

Commissioner Garamendi responded to the fires while juggling several legislative hearings regarding the fate of the workers’ compensation pure premium rates. Among Garamendi’s efforts: the creation of the Disaster Fraud Management Task Force and the declaration of an “Emergency Situation” in the Southern California counties affected by the fires. The “Emergency Situation” status allowed insurers to expand their use of adjusters to better serve the policyholders. More recently, Garamendi held a series of workshops in each of the four counties to help fire victims begin rebuilding their lives.

Mahrt said that the industry is prepared to deal with the financial impact of the fires. “Insurers prepare for catastrophes. It’s part of how we assess risk. Companies have long known that California is a fire hazard.”

Mahrt also said that she did not foresee the fires having a significant impact on the availability of homeowners insurance in California. “I think some folks were concerned that there was an availability crisis before the fires. What I would say is that we had a natural market adjustment, where some companies that had reached their maximum level of exposure decided not to continue expanding that exposure, giving companies with a smaller to medium-sized market share the opportunity to expand their market share.”

“I think that the best testament to that, is if you look at the FAIR plan, which is the market of last resort for homeowners who can’t get insurance, the FAIR plan has estimated their entire exposure to these fires at 600 claims,” Mahrt added. “But as of Oct. 31, they had only gotten 73 claims. What that says to me is that we did not have an availability crisis before, and certainly risk will continue to be part of the underwriting process. I think homeowners is going to remain available in California.”

The industry expects to see more accurate estimates of the fires’ impact in the coming weeks.

Topics California Catastrophe Natural Disasters Agencies Wildfire Homeowners