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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 20, 2018 02:12 PM (EST)
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.
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