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Fresno Bee (California)
Nov 02, 2003
by Anne Dudley Ellis, THE FRESNO BEE
Fire losses may not raise Valley insurance premiumsSouthern California's devastating fires should not mean higher homeowner insurance premiums in the central San Joaquin Valley, insurance industry officials said.
With the insurance industry facing at least $350 million in claims, the fires in San Bernardino, San Diego and Ventura counties could turn out to constitute the nation's fifth-worst fire disaster ever for insurers. The fires have destroyed more than 3,300 homes and torched 745,829 acres in the past week.
But as disastrous and expensive as the fires are, they should not affect most homeowners rates, said Omar Morales, spokesman for the Insurance Information Network of California, a nonprofit organization made up of insurance providers, with offices in Los Angeles and San Francisco.
"No single event impacts rates that dramatically," Morales said. "The insurance industry is prepared for this. They have adequate reserves."
The fires, however, may prompt insurance providers to "reassess" rates for areas prone to wildfires, Morales said.
"I would not imagine that would have an impact on Fresno," he said.
Doug Heller, senior consumer advocate for the Foundation for Taxpayer and Consumer Rights, based in Santa Monica, said California has excellent safeguards in place to guard against unjustified insurance-rate increases. Most importantly, all general-rate increases need approval from the state insurance industry closely in the coming year, Heller said.
Consumer advocates, however, will be watching the insurance industry closely in the coming year, Heller said.
"Insurance rates should not increase as a result of these fires," Heller said. "However, we anticipate that the insurance industry will propose rate increase requests as they typically do in the wake of disasters.
"As any homeowner knows, we pay out premiums for decades on end to prepare for this kind of disaster. But we know from the insurance industry's history that insurance companies look at tragedies as a way to push the premium envelope."
Heller predicted a wave of higher deductibles, reduced coverage and fewer policies written as a result of the fires.
Others said it was too soon to know whether the Southern California fires would affect insurance rates throughout the state because the full cost of claims remains unknown.
"We as a company can't give definitive answers," said Vickie Fernandez, a public affairs specialist for State Farm Insurance in Fresno. "The fires could have an effect."
Knight Ridder Newspapers contributed to this report. The reporter can be reached at firstname.lastname@example.org or 441-6328.
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