Canadian Underwriter

California wildfires spark regulator ire

May 9, 2004   by Canadian Underwriter

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California’s insurance regulator and the state’s insurers are waging a war of words over last year’s firestorm, just as new fires rage in Riverside County.
Insurance Commissioner John Garamendi announced his intention to push forward a “homeowners’ bill of rights” in response to coverage issues arising from last fall’s California forest fires. The unprecedented fires caused US$1.26 billion in damage, says the Insurance Information Network of California (IINC). Of that total, more than $750 million has already been paid out in claims, representing completion of 10,800 of the 12,900 expected claims.
Nonetheless, Garamendi accuses insurers of “screwing their policyholders big time”, and says the bill of rights will ensure policyholders are aware of what their policy does not, give the Insurance Department standing to mediate coverage disputes, and set timelines for homes to be rebuilt following a catastrophe.
The Association of California Insurance Companies (ACIC) fights back, saying if consumers are not aware of what their policy covers, the Insurance Department is to blame. “The Dept. of Insurance’s budget is more than US$130 million. It seems to use that the department could have found some funding within that huge budget to better educate consumers so coverage issues that are now being discussed could have been avoided,” notes an ACIC release.
While the current fires in Riverside County do not stand to be on the magnitude of last year’s catastrophes, dozens of buildings have been damaged or destroyed and nearly 29,000 acres affected. By the end of last week, most of the fires were at least partially contained.

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