CRMBC CEO and insurance industry expert Kaya Stanley explains how there is no government surplus to cover catastrophic economic losses from the Los Angeles wildfires.
The insurance industry is retreating Vice President Kamala Harris Insurance companies have offered to cancel policies for victims of the California wildfires, calling her claim “false, erroneous and dangerous.”
“A lot of insurance companies have canceled insurance for a lot of families that have been affected and will be affected, which will only delay or burden them,” Harris said at a press conference on the ongoing wildfires on Thursday. Additional will be 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, D.C., on Thursday. (Tasos Katopodis/Getty Images/Getty Images)
“I think it's an important point to make, and I hope there's a way to address this, because these families — many of them — otherwise won't have the resources to make a meaningful recovery,” he continued. way, and many of them have lost everything.”
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David Sampson, president and CEO of the Property Casualty Insurance Association of America (APCIA). FOX Business“To even suggest that insurers are abandoning their customers is false, wrong and dangerous, and it's especially troubling coming from a former elected official of the state of California who should know the law.”
He added: Insurers are committed to protect the safety of the injured and help their insureds to compensate the covered losses faster.
Plumes of smoke are seen as a wildfire burns in Pacific Palisades, California, on Tuesday. (David Swanson/AFP via Getty Images/Getty Images)
Sampson noted that California law prohibits insurance companies from canceling a policy during its term, except for very limited exceptions, such as non-payment of premiums or fraud.
“So the notion that people who have effective insurance coverage is going to be canceled on January 7 – just to have that effect on people and create that fear – I think is irresponsible,” he added.
FOX Business has reached out to the White House for comment.
California's insurance crisis: List of carriers that have fled or dropped coverage in the state.
Even before this week's wildfires broke out, California was in the midst of an insurance crisis, with many residents unable to get homeowner's insurance because several carriers have limited their exposure in the state or in recent years because of heavy losses and Disability in this state has been completely removed from it. Increase premiums adequately or assess risk according to California regulations.
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The state's largest homeowners insurance company, State Farm, announced in March of last year that it would not renew about 72,000 home and apartment insurance policies this summer. The company cited inflation, regulatory costs and increased disaster risk for its decision, and had already stopped accepting new applications in the state.
California wildfires could cost insurers $20 billion, the highest in the state's history.
Several other leading insurance companies, including All State, Farmers and USAA, have also introduced new policy programs in California in recent years as part of an effort to limit exposure to policies that have more risks than state lawmakers have allowed. They know it is wrong, they have limited it. charge them from insurers. Similar reasons for increased risk, high repair costs and increased reinsurance premiums are cited in these decisions.
while for Insurance companies To cancel policies before they expire 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 dwindle.
Homes burn as strong winds fuel the Eaton Fire in Pasadena, California on Tuesday. (David McNew/Getty Images/Getty Images)
Because of that situation, many homes destroyed by wildfires were not insured.
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In the wake of recent wildfires in Southern California, some critics have He blamed the insurance companies To refuse to cover property in fire-prone areas of the state. But Sampson says he has been warning California regulators for years about the vulnerability of the state's insurance market.
“For almost a decade now, for every dollar of homeowner's premiums we've collected, we've paid $1.09 in claims — and that's not sustainable,” he explained.
Eric Rolle of FOX Business contributed to this report.