Mike Zuckerman, CEO and president of the Golden State’s third-largest home insurance company, CSAA Insurance Group, issued a troubling statement Friday about the availability of insurance in California.
Zuckerman, unlike other companies that have stopped writing policies or refused to renew customers amid the raging fires, believes the state and its wildfires are still insurable.
“It’s hard to think about the answer to that: no,” Zukerman told the newspaper San Francisco Chronicle.
With the Palisades and Eaton fires far from under control, Zukerman acknowledged that it is “impossible to know exactly” how the insurance industry as a whole might respond to the fires.
However, the insurance giant claimed there is ‘no alternative’ to taking out home insurance.
“I don’t think there is an alternative for us as a society, as an industry and as a people,” he said. “Not being able to insure California homes against these types of risks will completely turn the state upside down.”
In recent years, many California-based insurance companies have cited the risk of costly wildfires as a reason to stop writing new policies, deny renewals to customers or even leave the state altogether.
A California home insurance CEO issued a chilling statement discussing the status of home insurance amid the ongoing wildfires burning hundreds of acres across the state. Pictured: A neighborhood destroyed by the Eaton fire in Altadena, California
Mike Zuckerman, CEO and president of the Golden State’s third-largest home insurance company, CSAA Insurance Group, issued a troubling statement Friday about the availability of insurance in California.
However, CSAA continues to write new policies in the state and renew the vast majority of existing policies.
Zukerman said CSAA has not renewed about 5,500 policies — 1.2 percent of the state’s total policies — because of wildfire risk in 2024, according to regulatory filings.
However, he added that the companies’ cancellations are not a sign that wildfires are not insurable, Zukerman said, adding: “It is a sign that insurance companies should be allowed to charge prices that reflect the increased risk of can insure. ‘
The question now is how much more expensive insurance will become in California, and whether more carriers will cut back on their operations in the state if additional – and costly – wildfires occur.
Starting this year, the California Department of Insurance will allow insurance companies to use wildfire disaster models to set new prices.
The companies will also be able to pass on part of what they pay for reinsurance (insurance for insurance companies) to their customers under the new policy.
Such reforms recognize that climate change increases overall risk, something Zukerman says “insurance companies need to be able to cover.”
Zuckerman, unlike other companies that have stopped writing policies or refused to renew customers amid the raging fires, believes the state and its wildfires are still insurable. Pictured: An aerial view of fire trucks, utility vehicles and other vehicles parked along the Pacific Coast Highway near homes destroyed by the Palisades Fire
In recent years, many California-based insurance companies have cited the risk of costly wildfires as a reason to stop writing new policies, deny renewals to customers or even leave the state altogether. Pictured: A neighborhood destroyed by the Eaton fire in Altadena, California
Exactly how much insurance prices will rise remains to be seen. However, experts fear that any increase could worsen California’s affordable housing problem, the Chronicle reported. Pictured: A parking lot is full of burned vehicles after the Eaton fire in Altadena, California
Exactly how much insurance prices will rise remains to be seen. However, experts fear that any increase could worsen California’s affordable housing problem, the Chronicle reported.
Zukerman’s CSAA increased home insurance rates by 6.9 percent earlier this year, although others, such as Allstate and State Farm, have increased rates by double digits.
Beyond the ongoing wildfires ravaging the west coast state, Californians must consider whether or not to continue building new homes in the wilderness-urban borderlands, where wildfires can quickly spread to homes.
The answer, according to Zukerman, should be no. But the CEO added, “The availability of insurance is a problem that California will have to solve.”