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.
The insurance industry is pushing back after Vice President Kamala Harris suggested that insurance companies have canceled policies for victims of the California wildfires, calling her claim “false, wrong and dangerous.”
During a news conference about the ongoing wildfires on Thursday, Harris said, “Many insurance companies have canceled insurance for many families that have been affected and will be affected, which will only delay or put an added burden on their ability to recover”.
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 that’s an important point to raise,” she continued, “and hopefully there can be a way to address this issue because these families — so many of them — otherwise won’t have the resources to “recovered in any significant way, and many have lost everything.”
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David Sampson, president and CEO of the Property Casualty Insurance Association of America (APCIA), told FOX Business, “It’s false, wrong and dangerous to imply that insurers are abandoning their customers, and it’s especially troubling coming from a former elected official in California who should know the law”.
He added, “Insurers are committed to protecting the safety of those affected and providing expedited relief to their policyholders for covered losses.”
Plumes of smoke are seen from a wildfire in Pacific Palisades, California, 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, except for very limited exceptions, such as nonpayment of premiums or fraud.
He added, “So the implication that people who have insurance coverage effective Jan. 7 is being canceled — just to give that impression to people and create that fear — is irresponsible, in my opinion.”
FOX Business has reached out to the White House for comment.
CALIFORNIA’S INSURANCE CRISIS: LIST OF CARRIERS THAT HAVE DROPPED 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 due to some carriers limiting their exposure in the state or pulling out entirely in the latter due to large losses and the inability to adequately increase premiums or assess risk due to California regulations.
Malibu resident Saphia Hall gives a first-hand account of the catastrophic wildfires in California on ‘Making Money’.
The state’s largest homeowner’s insurance carrier, State Farm, announced in March of last year that it would not renew about 72,000 home and apartment policies over the summer. The company cited inflation, regulatory costs and the increased risk of disasters for its decision and had previously stopped accepting new applications in the state.
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Several other major insurers, including All State, Farmers and USAA, have also held back new policy applications in California in recent years as part of an effort to limit their exposure to policies that carry what they see as unnecessary risk given what state regulators have allowed. they charge the police. Similar reasons of increased risk, high repair costs and increased reinsurance premiums are cited in these decisions.
While it is illegal for insurance companies to cancel policies before they expire in California, many homeowners whose policies were not renewed have struggled to obtain or afford coverage as the number of carriers in the state continues to shrink. .
Homes burn as strong winds fuel the Eaton Fire in Pasadena, California, on Tuesday. (David McNew/Getty Images/Getty Images)
Because of this situation, many houses destroyed by the ongoing fires were not insured.
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In the wake of recent wildfires in Southern California, some critics have blamed insurance companies for refusing to cover properties in the state’s fire-prone areas. But Sampson says he has been warning California regulators for years about the vulnerability of the state’s insurance market.
He explained, “Over almost the last decade now, for every dollar of homeowner’s premium that we’ve collected, we’ve paid out $1.09 in claims — and that’s not sustainable.”
Eric Revell of FOX Business contributed to this report.
