Billions in recent wildfire claims have led insurers to raise premiums and drop customers
photo credit: (Credit: Marc Albert/KRCB)
The chaos, stress and anger many fire survivors have endured trying to re-up their home insurance following mega-fires that have ripped through California the last five years are stories pretty well known. But, there's also parallel crisis locally and around California squeezing agriculture.
Not long after the Kincade Fire incinerated much of the 1,300-acre Chalk Hill Ranch near Healdsburg, it's owner, Charlie Martin received an unwelcome surprise. "I had never filed an insurance claim in my life and when I filed my first one, I was cancelled, through no fault of my own."
Martin, who blames Pacific Gas & Electric for the blaze, feels like he's been left holding the bag. The property, a vineyard, approaching a half century in age that also boards horses was in a bind. "I went to brokers, I went to individual insurance companies, everybody said 'sorry.' I'm located in what they call an area that is considered high fire danger, and nobody wants to insure that," he said.
Martin is far from alone. Complaints trickling into the state insurance commissioner's office have become a flood. Recently, Ricardo Lara, who holds that office requested insurers share comprehensive data about the issue.
Michael Soller is a spokesman for the California Department of Insurance. "It's clear that a lot of farms and wineries and other agricultural businesses are having problems getting insurance that they never had before, going back decades. We don't know how widespread the problem is, but we know it's happening," he said.
Martin said when he did receive tentative quotes, he was floored. "I've gotten policy quotes up to $150,000, when my original quote for all of my property here was under $25,000 for an annual premium."
And it's not just the expense. "Certainly the cost of insurance is a huge issue for folks, for people in agriculture as well as residential. The bigger issue that we hear about is just simply being able to get insurance," Soller said.
While insurers seldom win much esteem from the public, Soller laid out a pretty good reason insurance companies have been jacking up prices and dumping customers. "In 2017, with the massive fires in Sonoma and Southern California, insurance companies essentially paid out $2.25 for every dollar they took in. In 2020, again they paid out more in losses than they took in," he said.
A partial solution, currently making its way through the legislature--Senate Bill 11--would allow and compel the state's insurer of last resort to sell policies covering buildings on farms--the barns, storage and processing facilities key to getting crops to market. That so-called California FAIR Plan isn't a state entity, it's a consortium of the same private insurers that are shying away from the perceived risk that mega fires, giant losses and massive payouts are the new normal.
Ideally, insurers would compete for customers. Soller said that could happen if risk assessments were more detailed and accounted for work being done to harden properties.
"You know, we hear from ranchers who say, 'I am doing mitigation, that is my business. You know, my ranching business takes care of the grasses, keeps the fire risk down.' We need to recognize that, we need insurance companies to recognize that. Our wineries and our vineyards are a firebreak, and have been traditionally. We need clear standards for fire resistant structures and fire resistant farms that insurance companies recognize." That, Soller added would be better for insurers, the state and people like Martin.
"Insurance commissioner Lara wants to see insurance companies incentivizing home mitigation and mitigation of your business. So, if you do the things to make your home safer, to make your farm safer, he wants to see insurance companies putting money back in your pocket, in the form of premiums. Giving that incentive to help offset that cost," Soller added.
Unlike some others around the state, Martin isn't in crisis, but he is feeling the impacts. "I'm in a reasonably good position because I don't owe money on the property, but, I know one thing I can't do is I can't sell this property because it can't be insured."