How erroneous insurance policies fuel the risk of forest – San Diego Union -Tribune

Recent California forest fires destroyed 16,000 structures for More than $ 275 billionMuch more than Hurricane Katrina (200 billion dollars) or Helene ($ 225 billion). In many ways, this disaster in front of the important questions about the place where we live, the way we manage the risks when disasters strike in the regions subject to fire and role regulations can play to inaugurate better results for owners.

Today, we manage and attenuate forest risks thanks to a combination of state plans like California Fair plan,, Fema,, And the choices of insurers to cover houses according to risk levels of property, authorized premium prices and the ability to distribute the risk on a large portfolio of proprietary policies. But in the most risky unique state, California regulators have kept the bonuses artificially low historical Rather than scientifically paired risk. This forced those who lived in relatively safe areas to subsidize those who lived in risky areas. These subsidies encourage people to build in wild-urban interfaces subject to forest fires and to do so imprudently.

It was not always the way. In the 19th century, before the over-regulation of their industry, real estate insurers effectively distributed the risks and, more importantly, reduced it. By using price and profit as natural incentives, insurers have developed ways to delay the spread of fire through construction, design and safety protocols of buildings and insureders induced to accept their standards or to face highly higher bonuses. It worked; American cities have ceased to burn ground.

It was also true for other industries. Cars have become much more secure in large part to the tests carried out by the Road Safety Insurance Institute (IIHS), a research center sponsored by a consortium of car insurers. Guided by the IIHS, consumers have managed to put pressure on car manufacturers to add security features that lower bonus costs.

Fire insurance has a more complicated image because the probability of burns in your home depends on a large set of factors, many of which change over time and are not controllable by the individual owner. Fire, fire extinguishers and similar alarms work well when your home is rushing, but cannot help you if the forest threatens your entire block. It is therefore all the more imperative since regulators erase the concept of “prices regulating” and allow insurers to charge premiums which reflect the risks provided for factors such as current fuel load and the hardening of the house .

Innovations that link the risk of neighborhood fire for insurance rates could put pressure on dubious value. Colorado attenuation certification programs,, For example, use the threat of premium increases to allow owners to implement rational risk mitigation strategies, as Create a defensible space And build with non -combustible materials.

The recent changes to the California regulatory insurance scheme do not adequately deal with the basic problem and the need to integrate market incentives to create a lasting change.