Kaya Stanley, CEO of CRMBC and insurance industry expert, explains how there is no government surplus to cover the catastrophic economic losses associated with the Los Angeles wildfires.
The insurance industry then declines Vice President Kamala Harris Insurance companies have proposed canceling insurance policies for victims of California wildfires, calling their claims “false, false and dangerous.”
“Many insurance companies have canceled insurance for many families who have been affected and will be affected, which will only delay or place an additional burden on their capacity,” Harris said during a press conference regarding the ongoing wildfires on Thursday. “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 Katopoudis/Getty Images/Getty Images)
She continued: “I think this is an important point to raise, and I hope there is some way to address this issue, because these families – many of them – will not have the resources to recover in any way.” “The way, many of them lost everything.”
said David Sampson, President and CEO of the American Property Casualty Insurance Association (APCIA). Fox Business“It is wrong, wrong, and dangerous to even suggest that insurance companies are abandoning their customers, and it is especially troubling for this to come from a former California statewide elected official who should know the law.”
He added: “Insurance companies are committed to protecting the safety of those affected and providing prompt relief to their policyholders for covered losses.”
Plumes of smoke were seen as wildfires burned 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 failure to pay premiums or fraud.
“So to suggest that people who had insurance coverage in effect on January 7th have their insurance canceled — just to leave that impression on people and create that fear — is irresponsible, in my view,” he added.
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, California was in the midst of an insurance crisis, with many residents unable to obtain homeowners insurance due to many carriers limiting their exposure to the state or withdrawing entirely in recent years due to massive losses and an inability to insure Appropriately raise premiums or assess risks in accordance with California regulations.
Malibu resident Saphia Hall gives a first-hand account of California’s catastrophic wildfires on “Making Money.”
State Farm, the state’s largest homeowners insurer, announced in March of last year that it would not renew about 72,000 home and condo insurance policies in the summer. The company cited inflation, regulatory costs and increased disaster risks for its decision and had previously stopped accepting new applications in the state.
Several other leading insurers, including All State, Farmers and USAA, have also in recent years restricted new insurance claims in California as part of an effort to limit their exposure to policies that carry what they view as undue risks given what state regulators have allowed. them to charge policyholders. Similar reasons of escalation of risks, high repair costs, and high reinsurance premiums were cited in those decisions.
While it is illegal to 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 push the Eaton Fire in Pasadena, California, on Tuesday. (David McNew/Getty Images/Getty Images)
Because of this situation, many homes destroyed by the ongoing wildfires are not insured.
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In the wake of recent fires in Southern California, some critics have done just that Blame insurance companies For their refusal to cover properties in fire-prone areas of the state. But Sampson says he has been warning California regulators for years about the state’s weak insurance market.
“Over the last decade or so, for every dollar in premiums we collected for homeowners, we paid $1.09 in claims — and that’s not sustainable,” he explained.
FOX Business’ Eric Revell contributed to this report.
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