Michael Shashoua’s Post

While catastrophe models didn’t directly cause State Farm’s cuts in California, they don’t help matters much, either, states Amy Bach, executive director of United Policyholders (UP). Bach has told the California Department of Insurance that opaque and proprietary aspects of Cat models make it impossible for regulatory reviewers to evaluate their projections. She questioned insurers’ statements that Cat models make it easier to give discounts for mitigation, pointing out that revised flood risk models elsewhere eliminated mitigation discounts. https://bit.ly/3xx6RdS #PropertyAndCasualty #insurance #CaliforniaWildfires #InsuranceRegulation

While catastrophe models didn’t directly cause State Farm’s cuts in California, they don’t help matters much, either, states Amy Bach, executive director of United Policyholders (UP). Bach has told the California Department of Insurance that opaque and proprietary aspects of Cat models make it impossible for regulatory reviewers to evaluate their projections. She questioned insurers’ statements that Cat models make it easier to give discounts for mitigation, pointing out that revised flood risk models elsewhere eliminated mitigation discounts. https://bit.ly/3xx6RdS #PropertyAndCasualty #insurance #CaliforniaWildfires #InsuranceRegulation

"Democratic insurance commissioners in the Golden State have for years suppressed rates. Until recently, California was the only state that prohibited carriers from using catastrophe models to project disaster risk and pricing reinsurance costs into their premiums. Wildfires—exacerbated by the state’s poor land mismanagement—have swelled insurer claims and liabilities. Insurers are paying out $1.09 in expenses and claims for every $1 they collect in premiums. They’ve curbed their exposure in part by dropping policy holders in high-risk areas and leaving the market. The liabilities of the state’s insurer of last resort, FAIR, have exploded to $458 billion from $153 billion in 2020, with $5.9 billion in exposure in the Pacific Palisades. Yet Insurance Commissioner Ricardo Lara rejected FAIR’s proposed rate increases while requiring it to cover homes worth up to $3 million."

There are a lot of great (and timely) insights in this article co-authored by my colleagues- check it out!

The aftermath of the current Southern California wildfires will leave lasting impacts on residents and the insurance industry alike. In a recent article, our partner Kristin Gallagher and associate Eileen Bradley discuss some key information to be aware of:  · Insurance Protection: A one-year moratorium on insurance cancellations in fire-affected zones · Fast-tracked rebuilding via executive orders suspending environmental reviews · Rising liability claims against utilities and landowners · Long-term shifts in claims handling, risk assessment, and reinsurance costs Insurers must stay vigilant as legal, regulatory, and coverage complexities evolve. See the full article: https://lnkd.in/e7gZ7YZe #InsuranceLaw #SouthernCalifornia #LAwildfires

Commissioner Lara is revolutionizing the insurance landscape for Californians in high wildfire risk areas. Discover how new regulations encourage insurance companies to increase coverage options through forward-looking catastrophe models. Make sure to check out the details and the first-ever wildfire risk map released by the Department. #InsuranceReform #WildfireRisk #CaliforniaProtection https://bit.ly/4crr0AE

Florida's Insurance Market: Weathering the Storm! During a recent meeting with Florida lawmakers, Citizens Property Insurance CEO Tim Cerio shared insights into how regulatory reforms have fortified the state’s insurance market. Reflecting on Hurricane Milton—a 1-in-16-year event with estimated losses of $25 billion—Cerio acknowledged that without these reforms, the storm would have triggered an assessment on policyholders. Cerio emphasized the impact of legal reforms signed in 2023, which reduced market pressure and encouraged stability in the state’s insurance sector. Florida Insurance Commissioner Michael Yaworsky echoed these sentiments, noting that these reforms have attracted ten new insurers to the state and spurred capital infusion into both new and legacy carriers. He acknowledged that without these measures, the recent hurricane season—including storms Milton, Debby, and Helene—would have likely led to multiple insurer insolvencies. What are your thoughts on the role of these regulatory changes in shaping a sustainable Florida insurance landscape? #StormReport #Floridapropertyreform

Wildfire risk has dramatically increased over the past two decades, impacting the cost of insurance and the viability of tens of thousands of properties built in areas deemed severe risk. See just how much forest fire-related insurance claims have increased and how property owners can protect at-risk structures. https://lnkd.in/gVjASJrQ #Wildfires #HomeInsurance #ForestFires #PrismSpecialties

Interesting read on FL Insurance and how coverages within state backed insurance coverage offers protection, and ability to pay out on the recent storms. Under fine print there's separate deductibles that offer promising policies quotes, but unpromising delivery on claims. private insurance is option, expedited claims handling, parametric solutions to individual hazards. Hurricanes/ tornado/ earthquakes. Lesser time for appraisal and claims payouts.

This time feels different. For more than a decade, I’ve closely monitored media coverage and policy discussions around the impact of natural catastrophes and climate change on property insurance. Media coverage of wildfires and hurricanes has for a long time had a predictable cadence, with insurance typically being a “day two” or “day three” story. Not this time. Even as the massive fires in Los Angeles are not yet fully contained, and the peril from fierce Santa Ana winds continues, the public discussion has already turned to insurance. Fundamental questions about affordability and accessibility of insurance are now front and center. For those who were listening, insurance companies have been sending signals to the market about the actual risk and cost of covering property in disaster-prone areas. A widely reported example is the major insurer that recently non-renewed about 70% of homeowner policies in Pacific Palisades. Insurance is based on pooling risk and getting paid a reasonable premium commensurate with those risks. Insurers should not and cannot make promises they don’t have the wherewithal to keep. The scope of the insurance crisis has now been laid bare in the tragic, heartbreaking losses we are witnessing in Los Angeles. To date, policy responses – from resiliency initiatives to zoning to forest management and insurance regulations – have been short-sighted, inadequate or misguided. In America, California has long been a bellwether of what’s to come. Let’s hope that policymakers at all levels of government, the insurance industry and citizens can come together to find solutions to this growing challenge. #insurance #risk #californiawildfires #california #climatechange