California’s new wildfire protection regulation ‘a huge burden on insurers’

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Published by CDI to help homeowners and businesses meet required wildfire safety standards and receive insurance discounts Safe from wildfire structure In collaboration with state emergency preparedness agencies. The framework includes 11 mitigation measures in three layers of protection that insurers must factor into their assessment and use to provide consumers with a ‘wildfire risk score’:

    • Protecting Structure: Class-A fire rated roof; Maintain a five-foot fire-resistant zone around the home; six inches of fireproofing at the base of exterior walls; Volcanic and fire-resistant vents; upgraded windows (double pane or added shutters); and covered eaves.

 

    • Protection of immediate surroundings: vegetation and debris cleared from under floors; Removal of combustible sheds and other buildings for a distance of at least 30 feet; and defensible space compliance.

 

    • Working together as a community: The community must have a clearly defined boundary and a local risk assessment with the local fire district or state – including an identified evacuation route and funding for mitigation measures; And the community should seek fire risk reduction community designation and shelter designations.

 

“There are a lot of properties that don’t make it [Safer from Wildfires] list,” commented Larson, adding that mitigation measures are “easily identifiable” but challenging for insurers to quantify because manual inspections are required.

“Amber and fire-resistant vents are one of the features for attics and basements, and they’re so small that they need to be reviewed and evaluated by a person. Proving that those amber and fire-resistant vents are compliant is a very difficult task for insurers,” Larsen added. Some factors are easy to track. For example, insurers can use imagery and other forms of remote sensing to determine the distance between a home and any vegetation or combustibles.”

Too many homes are burning down in California — but can insured loans fix it?

As of December 5, 2022, CAL FIRE and the US Forest Services have next year-to-date (YTD) Forest fire statistics:

 

interval

 

 

Fire

 

 

acres

 

 

2022

 

 

7,543

 

 

362,476

 

 

2021

 

 

6,965

 

 

2,569,430

 

 

5 year average

 

 

7,824

 

 

2,236,221

 

According to CAL FIRE’s incident archive, during the 2021 season, 286 structures were damaged and 3,560 structures were destroyed. Those statistics speak to the main issue, which is “Many houses are burning in California” said Larson.

“The government comes with the assumption that if insurers provide credit, it will be enough to force homeowners to mitigate their fire risk,” he added. “It remains to be seen, but certainly if we look at other markets, that’s not the outcome we typically see.

“Homeowners may have to clear bushes near their homes, or they may have to invest money to cover their roofs. Few expect that the credits offered by insurers will be sufficient to recover their direct costs. It is a bit much to expect that the offer of insurance credits alone will significantly reduce the risk to people’s homes. It’s naive.

New California law “doesn’t guarantee” a healthy insurance market

Larson urged insurers to remember that “simply satisfying regulatory requirements does not guarantee” that it will create a desirable or profitable insurance product for the market. He said it was a “huge challenge” for insurers trying to simultaneously address wildfire-safe structures while providing compelling insurance solutions in a challenging market.

“The complexity of this new regulation certainly doesn’t make it any easier to work in the state of California,” he told Insurance Business. “The state is working to establish a more competitive and viable insurance market, but it is very difficult to say that these regulations will be a step forward. However, they are an effort in the right direction to reduce risk – because it makes for a better insurance market. This initiative may not be enough to actually reduce the state’s risk. Yet I think a lot should be done or try to minimize the risk.

How can insurance agents and brokers help policyholders with this new regulation?

Homeowners and businesses benefit exponentially from proper wildfire risk mitigation, and Larsen encouraged agents and brokers to focus on those benefits when discussing the new regulation with clients.

“The benefits of these mitigations accrue to a homeowner whether or not they get an insurance loan,” he said. “Part of an insurance agent’s goal is to be your policyholder’s risk manager, and explain to them: ‘These are wildfire protection features, and they’re very smart people suggesting why these are good mitigations.

“Maintaining expectations is also important. The financial credits that policyholders may receive from one carrier to the next are not a significant portion of the premium. Another value of an agent is going above and beyond and reminding the homeowner and/or business owner that these are not the only credits or things they can do to reduce their risk.

A government website has been developed with contact information for insurers operating in California State Farm And Allstate – It already offers rebates to customers to reduce their fire risk.

What are your thoughts on California’s new wildfire safety regulations? Let us know in the comments section below.

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