Amazing how folks won’t take the steps necessary to combat the root cause of virtually all the unprecedented recent “natural disaster” damage and destruction: greenhouse emissions. But they get really upset at the toll that wildfires (or even the statistical probability of wildfire risk) take, the unavailability of traditional 30-year mortgages in flood and coastal surge-prone areas, the horrors of vastly more intense hurricanes (from absorbing more warmer water from the oceans), tornados (from increasingly warm air slamming in to polar vortex cold air, both caused by climate change) or the higher cost of food as farm and ranchland dry up and blow away. FEMA is all over uninsured damage, disruption of amazing proportions. We are now facing trillions and trillions of dollars of continuing and perhaps permanent loss, massive human displacement, loss of habitat and wildlife (plants and animals) and new insect-born disease in the world as we once knew it.
As I stated in my recent Hell on Earth blog, people do not take seriously the climate change horrors experts are predicting “by the end of the century.” It reads as if we need to do stuff now to stop bad stuff from happening 80 years from now. Used to fiscally conservative habits of kicking cans down the road, too many of us, particularly older Americans, are much more concerned with the here-and-now and the immediate future. When the climate changes ravages cost us serious hard dollars, the reaction of those dealing with that costly crisis tend to narrow-focus on the costs attached to that specific crisis… and not on the bigger picture. The here-and-now reality is already absurdly expensive and wildly damaging.
As a case in point, I present excerpts from an April 12th letter to the editor at the Los Angeles Times from one Steve Poizner, who is turns out is a well-off 65-year-old California resident facing an insurance industry that is truly worried that it cannot afford to cover what most of us take for granted… stuff like home ownership… because the statistical risks are sending strong signals that they face catastrophes beyond their reserves or those of their reinsurance partners. The caption on that letter reads: “Despite no wildfire threats, I suddenly lost my home insurance.”
He states: “Things weren’t always this dire for Californians. A few years ago, my insurance company assured me that if I took steps to protect my home, then my coverage would be renewed. I live in a hilly suburban area with lots of trees just 15 minutes from San Jose airport. At a cost of thousands of dollars, I put in state-of-the-art vents on all openings in my home where fire or wind-blown embers could enter; pruned trees to keep them away from a deck; and thinned foliage in my yard to create ‘defensible’ space. No wildfire has ever threatened my home in the 25 years I have lived in Silicon Valley. Satisfied with my efforts, the company insured me year after year.
“Until this shocker hit my mailbox: My home is suddenly ‘ineligible due to the wildfire risk assessment of the dwelling location.’… I pressed to know more about this decision, but tight-lipped is an understatement to describe my insurance company. Eventually, the company revealed that it now relies on confidential software that predicts wildfire risk by geographic regions in California. But the insurer was unwilling to share details with me. The new approach ignores steps that people take to protect their homes by following guidelines from fire prevention authorities.
“Getting non-renewed was just the beginning. My bank sent a letter warning me that if I don’t get insurance, it will buy it for me — at an exorbitant price — and only enough insurance to cover the amount of my outstanding loan balance, not the replacement cost of the home. I also received notice that I will lose my earthquake insurance… But no other California-licensed company would cover me.
“That left me with only the ‘non-admitted’ market. This market consists of insurers that are only lightly regulated by the California Department of Insurance and that sell insurance on whatever terms and at whatever price they want. Historically, non-admitted insurers covered extreme risks, such as sawmills, blasting contractors and crane and rigging operations.
“One non-admitted company immediately got back to me. To my surprise, it was an out-of-state affiliate of my longtime insurer. California law prohibits excessive rates for consumers. My insurer avoided that by abandoning me and then passing me on to an out-of-state affiliate that offered a policy at twice the price with half the coverage — effectively raising my premium fourfold.” It’s pretty sad to say the least, and for many across the land, the inability to get adequate homeowners’ insurance is more than enough reason for a lender to call the mortgage. Folks who cannot afford what then needs to be done face losing their home, and for many their precious equity.
Poizner’s solution involves mandates on insurance companies, many of which simply leave the state, or creating governmental pooling (under California’s Fair Plan system): “California law prohibits excessive rates for consumers. My insurer avoided that by abandoning me and then passing me on to an out-of-state affiliate that offered a policy at twice the price with half the coverage — effectively raising my premium fourfold… If I were on a fixed income, this could literally drive me out of house and home.
“As a last-ditch option, I can turn to a backup insurer known as the FAIR Plan. To do business in California, homeowner insurers must participate in the FAIR Plan. Californians who can’t access fire coverage from a traditional insurer turn to this state-mandated program. But FAIR Plan policies are more expensive, offer pared-back benefits and exclude coverage for such things as theft, vandalism and liability. (Some add-ons are available for hefty additional premiums.) The companies that make up the FAIR Plan resist expansion, and instead fight in court to limit its offerings. The same insurers that are leaving California residents like me behind are the ones restricting coverage in the FAIR Plan.” He goes on along the same thread. But not a word about the root cause of it all: a failure to contain the emission of greenhouse gases. We want to insure against our own mass stupidity, denial and stubbornness?
I’m Peter Dekom, and one more thing: Steve Poizner just happened to be the insurance commissioner of California from 2007 to 2011.
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