SACRAMENTO, Calif. — Gina Posey said for her and her community in El Dorado County in the Sierra foothills, property and wildfire insurance is a mentally exhausting topic, because of the fear of having your policy canceled.
“Seventy-five days before your policy is up for renewal,” Posey said. “Is the date that you’re watching and waiting for the phone call to see if they’re going to cancel you. And it is just happening so often. It’s rampant here.”
Posey said her policy was canceled earlier this year but was unexpectedly reinstated.
She understands wildfire risks and has worked hard to fireproof her home — for safety and to appeal to insurers.
“I’ve been cutting every year, more and more to give me more space between the trees,” Posey said. “Trimming up the trees, removing anything that’s remotely close to dying, and just doing a lot of that maintenance.”
She said it’s not just her in her neighborhood.
“We remain a fire-wise community,” Posey said. “We are required to do defensible space on our homes, and then we aggregate that every year. And we provide that to the National Fire Protection Agency to prove to them that we are indeed working on making our community more fire-wise each year.”
Still, she said most of her neighbors rely on the Fair Plan, a last-resort insurance option, or are canceled.
At a recent Assembly Insurance Committee hearing, the state’s insurance commissioner Ricardo Lara said he is working to stabilize the market, where seven of the 12 largest insurers have cut back or left.
A key issue is catastrophe modeling, which insurers want to use to set rates based on future risks rather than past data, which in California has been used for decades.
He said it’s coming, and it’s a good thing for high-risk areas.
“First in the nation commitments from insurers to write more policies in the wildfire distress areas across California,” Lara said. “No other state has achieved this type of commitment. Other states allow for cat [catastrophe] modeling. They allow for reinsurance and get nothing in return. We are getting a guarantee that they’re coming back and they’re not abandoning communities like Paradise.”
Lara said this modeling should be out in the next few months and said he has guarantees that insurers will begin to come back next year.
He also admits people should prepare for a spike in rates initially.
“Let them understand that this is going to be painful because we should have done these changes years ago,” Lara said.
The initial pain of rate increases, Lara said, will lead to stabilized rates, without constant increases like people see currently, and the possibility of rates to come down with more companies here.
It’s a plan Posey said she can understand.
“Once you have competition, then ultimately you have increased supply,” Posey said. “And then you can look at prices coming down. That’s what he’s hoping will happen. And I do indeed hope he’s right.”
A hope she said she and her neighbors will hold on to, along with holding those in power to their word.
