We created a committee in April of 2019 focused on the problem of insurance carriers not renewing homeowner's policies. We had become already aware of several non-renewals, and learned that some firms have indeed stopped writing policies here. Chubb made it clear via internal memo that they wanted to reduce their risk in our market, as they cover 60% of Montecito homes. They are shedding risk by not renewing homeowners in our community.
California has been so much in national / global news in the past 2.5 years with wildfire and disaster coverage, we suspected this problem was wider than just Montecito. Indeed, it is a huge statewide problem at present.
We are working with our state representatives Senator Hannah-Beth Jackson and Assemblymember Monique Limón to find solutions. Monique pulled in Congressman Carbajal and Insurance Commissioner Ricardo Lara. They asked us to collect data on the depth of the problem here. We have put together a brief survey for our community, and collected over 300 responses.
We shared our survey with Insurance Commissioner Lara and Assemblymember Monique Limón's office in a joint meeting held here at the Montecito Association on Friday August 9th, 2019. Commissioner Lara's presentation can be accessed here.
We have made some requests of the Insurance Commissioner and Assemblymember Monique Limón:
1. A higher number of non-renewals occurred in the area above Highway 192. This area has been declared at very high risk of wildfire. We believe this is contributing to a higher level of non-renewals. Since the area burned in 2017 as part of the Thomas Fire, it is unlikely to burn again within the next 10 years. If the area was downgraded to 'high risk of wildfire' from 'very high', we believe it may reduce the problem of non-renewals.
2. We saw internal memos from AIG and Chubb that indicated their profitability over the past 17 years was wiped out in 2018. Their strategy to reduce risk and recover their losses is to shed risk via non-renewal of homeowner policies and to dramatically increase premiums for clients they take on. It felt to us all the insurance companies were taking this approach, and that has the appearance of collusion. The state of California has standards for many industries operating here that are higher than national standards. The state could pass regulations requiring insurers to carry higher risk profiles to operate in California.
3. Montecito is not waiting for the next disaster to strike. We're deeply engaged in resiliency initiatives here, including the ringnets in the canyons to prevent future debris flows from the Partnership for Resilient Communities, exploring a debris basin with our county on Randall Rd, working with the Clean Coalition on a possible micro-grid to ensure essential services are backed up by solar power, and other hardening initiatives. We provide an emergency 3 day backpack as a gift with our membership. We also educate our community on being safe. We feel insurance companies do not know about these initiatives, and they should. So we've asked Commissioner Lara to engage with the insurance industry, speak at their conventions, publish in their periodicals, and educate them about our wildfire cycles.
We've also connected with Mission Canyon and Eucalyptus Hill neighborhoods in our community, and with the city of Malibu on this issue.
We'll continue publishing updates on this page as this issue moves forward in our state.