California fires deliver opportunity to independent agents

by Scott Kersgaard04 Nov 2015
It’s an old story. When disaster strikes, insurance carriers pull up stakes and head for the hills—or in the case of California wildfires, away from the hills.
 
But is it true?
 
Certainly some of the big household retail brands are advising homeowners that their policies will not be renewed.
 
It isn’t just homeowners and insurance agents that are feeling the heat. Real estate agents in some parts of California are saying that insurance that is expensive or difficult to find is making it hard to sell homes, as insurance is always required if the property is to be mortgaged.
 
One of the problems, if you want to call it that, is that insurance companies today have better risk data than ever before, and can use that data to hone in on the riskiest areas and either raise rates or decline to offer coverage at all. All that information, said a spokesperson for the California Department of Insurance, enables “insurers to price the risk accordingly.”
 
She said insurance companies today can single out the homes at the greatest risk and deal with that risk in a way that enables the insurance company to turn a profit.
 
A State Farm agent, and owner of an agency, told a roundtable of real estate agents last week that “This is the worst situation I’ve ever seen in the 31 years I’ve been doing this. And I don’t think it is going to change anytime soon.”
 
He was quoted by TheUnion.com, a local news organization in Nevada County, CA. When reached by phone, he told IBW that his contract with State Farm prohibits him from talking to the media and that he hadn’t known there was a reporter in the room. He did not disclaim his remarks, however.
 
He told the forum there is coverage available but that 6 or 7 out of 10 carriers are likely to say no to new coverage.
 
He was right about coverage being available. Two MGAs told Insurance Business Wholesale that they have carriers to write homeowners policies in high-risk areas.
 
“We found a carrier,” said a spokesperson for RIC Insurance General Agency, with 8 offices through the West Coast, headquartered in Santa Rosa, CA.
 
Ron Abram, president and CEO of Abram Interstate Insurance, a wholesale firm in Rocklin, CA, said his agency is not having any trouble finding coverage for property owners in fire-prone areas. “We are not having any trouble finding coverage. That’s what we do,” he said.