The Eaton Fire that tore through Altadena, California, turned the home of Jeff and Jennifer Cohen into a shell of what it used to be.
“I think there’s some walls up, and it seems like the second floor collapsed onto the first, but I couldn’t tell you if there’s anything salvageable,” Jeff said.
Getting money to rebuild will take time. The couple have found temporary housing, but last September, they received a notice from their longtime insurance company that the policy covering their home would not be renewed. They’re among over 100,000 Los Angeles homeowners whose insurance had been dropped before the latest wildfires.
When asked if they gave a reason why, Jeff said, “It’s the fire hazard. It’s a fire danger, you know? We were in an area that they couldn’t provide insurance to any longer.”
As victims like the Cohens come to grips with a devastating loss, analysts predict insurers could pay out more than $20 billion just from this latest wildfire disaster alone, according to JPMorgan.
“The kind of risk has been changing very quickly,” said Frances Moore, a University of California associate professor who studies the economics of climate change. “Any healthy risk management, we really want the insurers to have an accurate picture of what that risk is.”
Nationwide, the insurance industry already faces tens of billions of dollars in losses from natural disasters.
Rob Newbold of the risk assessment company Verisk says one way to financially plan for those disasters could include computer-generated catastrophic models.
“How does the climate conditions, in terms of temperature and weather, taken together with where the properties are with infrastructure, in terms of things like putting the fires out, prevalence of local fire stations, prevalence of local fire breaks — all of these come together to run simulations of what could happen over the next one year of activity,” Newbold said.
Verisk already offers to insurers around the country models covering everything from wildfires to tornadoes and hurricanes.
“We have this deeper red color over in and around Beverly Hills. That indicates there’s greater loss potential, based both on the ignition point, the spread rate, the intensity of the fire, as well as the value of the exposures in that zip code. The insurance company can understand this loss potential and have sufficient money on hand to pay claims,” Verisk said.
Under an old law to protect consumers, California regulators prohibited using models like these to help set rates, but the state is lifting that ban. Verisk is the first company to submit its models for approval.
The Cohens eventually found coverage, but only through a government-sponsored pool at a much higher cost than what they previously paid. Even that pool may not have enough funds to cover the expected claims for the Los Angele fire damage.
The couple isn’t sure if they will rebuild in California and now live in limbo after the fires burned their home of 23 years to the ground.
