CRMBC CEO and insurance industry expert Kaya Stanley explains how there is no state surplus to cover the catastrophic economic losses associated with the Los Angeles wildfires.
After the insurance industry pushed back Vice President Kamala Harris Proposed insurance companies canceled policies for victims of the California wildfires, calling his claims “false, inaccurate and dangerous.”
“Many insurance companies have canceled insurance for many families who are affected and will be affected, which will delay or overburden their ability to recover,” Harris said at a news conference on the ongoing wildfires Thursday.
Vice President Kamala Harris speaks to the media about the federal response to the Los Angeles wildfires at the White House in Washington, DC, on Thursday. (Tasos Katopodis/Getty Images/Getty Images)
“I think it's an important issue that must be raised,” he continued, “and hopefully there can be some way to address this issue, because these families — many of them — otherwise wouldn't have the resources to make any meaningful recovery.” , and many of them lost everything.”
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said David Sampson, President and CEO of the American Property Casualty Insurance Association (APCIA). Fox business“It is false, inaccurate and dangerous to even suggest that insurers are abandoning their customers, and this is especially coming from a former California statewide elected official who should know the law.”
He added, “Insurers are committed to protecting the safety of victims and providing prompt relief to their policyholders for covered losses.”
Smoke billows like wildfires in California's Pacific Palisades on Tuesday. (David Swanson/AFP via Getty Images/Getty Images)
Sampson noted that California law prohibits insurers from canceling an insurance policy during its term, with very limited exceptions, such as nonpayment of premiums or fraud.
He added, “So canceling people with insurance coverage effective January 7th — just to leave that impression and create that fear in people — is irresponsible in my view.”
Fox Business has reached out to the White House for comment.
California insurance crisis: List of carriers that have fled or reduced coverage in the state
Even before this week's wildfires hit, California was in the midst of an insurance crisis, with many residents unable to obtain homeowners insurance because several carriers have limited their exposure in the state or pulled out entirely due to heavy losses and disabilities in recent years. Adequately raise premiums or assess risk due to California regulations.
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The state's largest homeowners insurance carrier, State Farm, announced in March of last year that it would not renew some 72,000 home and apartment policies over the summer. The company cited inflation, regulatory costs and rising risks of disruptions for its decision and had earlier stopped accepting new applications in the state.
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Several other leading insurers, including All State, Farmers and USAA, have also curbed new policy applications in California in recent years as part of an effort to limit their exposure to policies that allow state regulators to cover what they see as unreasonable risks. Policyholders to charge them. Factors similar to increased risk, higher repair costs and rising reinsurance premiums were cited in those decisions.
This is illegal though Insurance companies As for canceling policies before expiration in California, many homeowners whose policies have not been renewed have struggled to obtain or afford coverage, as the number of carriers in the state continues to shrink.
Homes were gutted by strong winds in Pasadena, California on Tuesday. (David McNew/Getty Images/Getty Images)
Because of that situation, many homes destroyed by ongoing wildfires are not insured.
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In the wake of the latest wildfires in Southern California, some critics Responsible insurance companies For refusing to cover properties in fire-prone areas of the state. But Sampson said he has been warning California regulators for years about the weakness of the state's insurance market.
He explained, “Over the last decade or so, for every dollar in homeowner premiums that we've collected, we've paid out $1.09 in claims — and that's unsustainable.”
Eric Revell of Fox Business contributed to this report.