According to , the same home insurance scenario is playing out in states like Florida and California, and is becoming more pronounced in the Pacific Northwest due to the increased risk of natural disasters. new report From the Seattle Times.
Dozens of state residents have complained to the Washington Insurance Commissioner’s office about policy limitations, cancellations and on-site denials. In one case, a homeowner was told there was nothing the state could do about the policy’s outright denial, after which the agency closed down the complaint.
“The number of such complaints reported since 2022 is about 10 times the annual average for the past six years, and Washingtonians say their insurance companies are using wildfire risk scores to terminate insurance policies. The report explains that the problem is growing.
Although such risk models were first developed by the federal government to help homeowners withstand potential disasters, they are also used by the insurance industry to inform underwriting decisions. is increasing.
“However, the models used to deny coverage are far from uniform, are often hidden from consumers, and their use is primarily based on corporate will and interests,” the report said. ing. “Insurance companies are employing a variety of third-party vendors that leverage different data sources and consider different elements of insurance.”
The use of wildfire risk scores, aimed at predicting the likelihood of home destruction from natural disasters, is becoming increasingly common across the country. Coverage limitations resulting from such scores have led lawmakers in other states, particularly California, to seek to legislatively address such concerns from constituents.
One such law, passed in Oregon earlier this year, aims to “block the state’s risk maps from influencing insurance policy decisions,” the Times reported. California publicly tracks non-renewals to ensure transparency in risk assessments and the ability for citizens to challenge scores; Washington state has no such policy. .
“Unfortunately, we cannot direct or compel companies to reinstate their insurance policies,” state compliance analysts wrote in a letter to state residents who have complained about loss of insurance. It has been reported. “No violations found.”
When contacted by the Times, a representative said: pemco insurance The company said it made the “difficult decision” to reduce coverage to less than 1% for homes in Pacific Northwest states such as Washington and Oregon.
“But with our focus on changing wildfire risk and homeowners insurance, policyholders can do all of these things.” [to reduce risk] And we still can’t insure their property,” Dawn Lee, vice president of PEMCO, told the Times.
Lee went on to cite issues such as the increased risk of natural disasters, ongoing economic inflation, and increased home construction in wildfire-prone areas as influencing PEMCO and other insurers’ decisions. .
Residents also said the insurance they were able to purchase had very high interest rates and, in some cases, provided coverage for less than half the value of the home, according to consumers interviewed by the Times.
According to an analysis by first street foundation, the number of homes at risk from wildfires is expected to increase by up to 30% over the next 30 years, and much of that risk is currently concentrated in the central and eastern parts of the state, which stretch between the cities of Wenatchee and Spokane. There is. The risk is projected to be negligible for Western Washington residents in and around the Seattle area, the state’s most populous area.