A.M. BestTV: Wildfires Likely to Shake Up California’s Homeowners Insurance Market, Say A.M. Best Analysts
OLDWICK, N.J.--(BUSINESS WIRE)--Nov 20, 2018--In this episode of A.M. BestTV, Jason Hopper, associate director, and David Blades, senior research analyst, both with A.M. Best, said losses from the ongoing wildfires in California will put pressure on homeowners insurers. Click on http://www.ambest.com/v.asp?v=ambcafires1118 to view the entire program.
Hopper said while insurance companies would like to secure rate increases that are commensurate with the growing risk, they may face uncertainty from regulators. Ultimately, they may choose to reduce their own risk tolerance.
“Regulators do try to take a balance between consumers and insurers,” said Hopper. “We believe there are insurance companies that are choosing to limit their risk to these types of high-risk areas, which at the same time is creating opportunities for non-admitted insurers such as Lloyd’s.”
In the episode, the analysts also discuss the maturity of wildfire models, factors leading to a greater number of California wildfires, including population growth and urban sprawl, budgetary concerns complicating wildlife management and how the wildfires will impact reinsurance costs and primary market fundamentals.
“Given the greater propensity of wildfire outbreaks, there’s no question there’s going to be a definite need for reconsideration in terms of underwriting and pricing strategies when you’re looking at climate change and population trends that have changed the paradigm,” said Blades.
Recent episodes of A.M. BestTV include:Methodology Revision Led to Changes for 3% of Rated EMEA Insurers, Say A.M. Best Analysts: From the 2018 A.M. Best Insurance Market Briefing – Europe in London, Greg Carter, managing director, analytics; Carlos Wong-Fupuy, senior director; and Mahesh Mistry, senior director, analytics, discuss the impact of A.M. Best’s 2017 rating methodology update: http://www.ambest.com/v.asp?v=bcrmpanel1118. EMEA Insurers Seek Growth Opportunities in Trending Non-Life Lines: At A.M. Best’s 2018 annual Insurance Market Briefing — Europe, EMEA insurers said they see growth opportunities in insurance for mortgage, cyber and terrorism: http://www.ambest.com/v.asp?v=imbe11118. Latin America Offers Large Potential Market for Microinsurance, Says A.M. Best Senior Managing Director: From the LIMRA-LOMA Latin American Conference in New York, NY, Andrea Keenan, senior managing director, discusses the state of the microinsurance market in Latin America: http://www.ambest.com/v.asp?v=keenan1118.
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SOURCE: A.M. Best
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PUB: 11/20/2018 02:30 PM/DISC: 11/20/2018 02:30 PM