Lloyd and his wife later bought another home in Hidden Valley Lake, a town that has taken ambitious steps to reduce flammable vegetation, but their insurance premiums are still more than $4,500 a year, more than their home in Kansas. Three times more than the previous house. Lloyd is worried that his insurance company will raise his prices further under the new rules.
Other states in the West such as Colorado and Oregon are also seeing declines in insurance coverage following major wildfires, though their problems are less severe than the Golden State. For example, in Colorado, officials recently established a State Fire Insurance Backstop Like California's FAIR plan, as customers have been turned away en masse there just in the last few years. California's grand deal with the insurance industry provides a blueprint for those other states: If you want to address the coverage gap, you need to give insurers broad authority to set prices.
Even this may not be enough. The past few years have seen a respite from major wildfires in 2017 and 2018, but this week's blaze in the Los Angeles area could cause billions of dollars in damage equivalent to a Camp Fire-like event.
Joel Locher, a former regulator and fire insurance expert at the consumer advocacy organization United Policyholders, said damage from the Los Angeles fires could lead to further price increases and greater availability gaps.
“These are obviously going to be big losses,” he told Grist. “There are certainly going to be new challenges in some areas, to the extent that insurers will be able to charge a rate that they think is worth paying in those areas.” Laucher said insurance companies can't refuse to renew as many policies as they could under previous state rules, but they can still avoid selling policies in some affected areas.
Frazier, of the insurance trade group, expressed similar concerns. He said that despite the commissioners' reforms, another round of catastrophic blowouts on the scale of 2017 and 2018 could once again drive the insurance industry away from the state.
“If we get a few more unprecedented years, all bets will be off,” he told Grist.