After major California insurers pause new homeowners policies, could other parts of the West see the same?
Two major insurers are now no longer issuing new homeowners insurance policies in California, with both citing the growing risk of natural disasters like wildfires.
The latest is State Farm, which pointed to its “rapidly growing catastrophe exposure," as well as inflation and issues with the reinsurance market, when it announced the move in late May. Allstate stopped selling homeowners insurance policies in the state last November.
“This general increase in the occurrence of severe weather disasters, that's a global phenomenon that's not just limited to California,” said Judson Boomhower, an environmental economist at the University of California San Diego who studies climate-related disasters and insurance. “And scientists tell us that that's related to climate change.”
While some factors cited by the insurers are present across the West, not just in California, Boomhower cautioned that it doesn’t necessarily portend a broader pull-back from home insurance markets across the region.
“Just given the way that the risk is escalating, it would be really surprising if prices didn't go up” in the West, he said. “The thing that's harder to forecast is what companies are going to do on the availability side.”
That’s because California regulations that help determine insurance pricing could also be at play in the insurers’ decisions, he said.
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.