In response to questions from WIRED about State Farm’s coverage changes, Sevag A. Sarkissian, a California company spokesman, highlighted previous statements the insurer has made about giving up new business and its decision not to renew other policies. “Price changes are driven by rising costs and risk and are necessary for State Farm General to deliver on the promises the Company makes every day to its customers,” Sarkissian said.
“While we are suspending sales of new homeowners insurance in California in 2022, we are continuing to serve many existing insurance customers,” Allstate spokesperson Teny Josephbek said in a statement to WIRED. Cost increases also explain Allstate’s rate hikes, he said. “Higher home values ​​and maintenance costs associated with normal, severe weather lead to higher bills to help customers recover, so we need to adjust rates to better reflect the cost of protecting our customers.”
Liberty Mutual did not respond to a request for comment.
Of course fires are getting more expensive. Climate change is creating conditions that make wildfires more severe and wildfire seasons longer, said Char Miller, a professor of environmental analysis at Pomona College in California and an expert on wildfires in the US West—an idea supported by a recent study by the National Oceanic and Atmospheric Administration. .
“The drought in the US Southwest since 1980 has caused so much heat that many areas are ready to explode,” Miller said. Once a fire starts, he adds, these days it can quickly get out of control. “The planet is rapidly heating up, which increases vegetation decay and creates impossible conditions for firefighting.”
Forest management in California—including a misplaced focus on fire suppression for more than a century—has also been responsible for a bad wildfire trend, as burned material has been allowed to build up in the state’s wildlands. A certain level of burning is ideal for California’s wild areas, as it keeps the levels of flammable materials low.
Californians have also been moving into high-risk, fire-prone areas, known as the wildland-urban interface, or WUI. These are areas where human development meets undeveloped wild areas, which due to fire suppression, are filled with vegetation that is ready to burn.
Russell says: “You have people pushing in places they didn’t belong. “People looking for the American Dream are moving forward from LA and San Francisco—where the world is cheap, but also dry and less exposed,” he says.
Given all these factors, it is not surprising that the estimated number of buildings that will be destroyed by wildfire each year is expected to double in the next thirty years.
But the fires and displacement patterns alone haven’t caused insurers to limit their coverage, Russell said. He believes that the biggest contributor to this problem may be the government’s own policies and laws related to fire insurance.
Back in 1988, voters in California narrowly passed a ballot measure known as Proposition 103, which gave the California Department of Insurance the right to suppress insurance rates it deemed excessive, and required insurers to have any rate increases approved before these were passed on to customers. This was designed to protect consumers, but as the state has been hit by devastating fires, this ability to keep costs down has ended up pushing the insurance industry in the wrong direction.