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Wildfires & The Insurance Problem

As I write this the death count in the Butte County Camp Fire stands at 64 but is climbing.

Just 24 hours after the conflagration started, heavy smoke had already drifted to the North Coast and Bay Area.

After its fourth day it was declared to be the most destructive in state history.

In a break with its past practice, Pacific Gas & Electric Co. informed state officials one of its power lines in Butte County failed at about the time the fire erupted in hills around the small town of Pulga.

The PG&E self-report to the California Public Utilities Commission stated that a 115-kilovolt line fell on Pulga Road in Butte County, on Thursday, Nov. 8; at about 6:15 a.m Cal Fire had already determined that Pulga Road was the Camp Fire ignition point.

So while the cause of the fire appears to be known at this time, other factors and consequences are not so precise.

For example, a new law will allow PG&E and other utilities to recover an unknown amount of liability costs from wildfires because utilities could issue so-called “rate recovery bonds” that PG&E’s customers would be responsible for repaying through a “wildfire surcharge” on their monthly bills. Keep in mind that nobody will know how much the surcharge is until the California Public Utilities Commission (PUC) determines just how much liability will be charged to the state’s electrical utilities. There’s a complex process that includes something called a “bankruptcy stress test,” to determine if a utility’s liability crosses the bankruptcy threshhold, if so, any costs beyond that theoretical point would be passed on to ratepayers. Also the term length of the bonds will affect the amount of the surcharge.

Another issue to be considered is that of home owner property insurance.

According to both state and insurance industry estimates, the Camp Fire in Northern California and the Woolsey Fire in suburban Los Angeles, are expected to cost the state, insurers and homeowners over $19 billion.

According to the insurance credit rating agency A.M. Best, insurance companies in California lost nearly $16 billion last year, four times their losses in 2016.

Fire insurance was already an issue in California before the most recent blazes started. Premiums are already rising for homeowners in areas of high risk of wildfires, and some companies are refusing to renew policies for people in these areas. This practice is known as red-lining.

Almost half of California has an elevated risk for fires, with 15.5 million people living in critical areas according to the U.S. Climate Prediction.

Recently, Moneywatch reported that, “California’s most vulnerable homes aren’t located in cities. Instead, they’re found in areas defined as ‘wildlife-urban interface’” – built just close enough to woodlands so that a spark from a tree can set a whole town on fire. A report from State Insurance Commissioner Dave Jones’ office shows that 25 percent of housing is in ‘high or very high risk’ areas in almost half of the state’s counties. ‘You can see why wildfires are now an everyday threat to life and property for Californians,’ Jones said in a statement. And insurers see it too, Jones said. By using sophisticated computer models that include climate projections to determine if some areas of the state are at too high a risk, insurers can then decline to write, or renew policies there, according to Jones. They may also write policies without fire coverage …”

Clearly there’s a problem and it appears to be growing with each of these massive, historically destructive wildfires. The people of California have already been told they will be footing the bill on bailing out electrical utilities that have caused most of these fires.

Now insurance companies are gouging and/or denying many of these same folks from obtaining insurance coverage for losses of homes and property due to wildfires. Isn’t it time that somebody bails out these people?

* * *

Let’s see, the state Elections Office has 4.5 million ballots still to count, while Mendocino County has 16,000 to tally. Which elections office do you think will finish first?

If the past is any indication of what to expect now, then Mendocino County residents will most likely learn local results well after state tallies are finalized. The reason for slo-mo ballot counting in our county is primarily due to the Elections Office not hiring extra help to do the job. That was one of the findings of an investigative report by the Ukiah Daily Journal following the November 2016 election.

Yet as simple as the solution to this long-standing problem is, it has yet to be implemented. The unanswered question is, Why?

Anyway, according to a statement issued by Assessor-County Clerk-Recorder Susan Ranochak, “as with every other election, there are ballots left to be processed as part of the official canvass. Mendocino County has 16,730 Vote By Mail ballots to process, and 1,011 Provisional ballots to review and process. Of the outstanding ballots left to count: the 3rd Supervisor District has 3,288; and the 5th Supervisor District has 3,210 ballots to process and count. The City of Ukiah has 2,900; The City of Willits has 776; and the City of Fort Bragg has 1,300 ballots left to process and count. Per State law, we have 30 days to complete the canvass. The Statement of Vote, which breaks down results by precinct, will be available at that time.”

The actual election day results had 15,819 votes cast and counted. So there are now nearly an additional 18,000 votes to be processed. That leaves a number of races undecided at this juncture, including the 3rd District Supervisor election where John Haschak has a 346-vote lead over John Pinches.

(Jim Shields is the Mendocino County Observer’s editor and publisher, and is also the long-time district manager of the Laytonville County Water District. Listen to his radio program “This and That” every Saturday at 12 noon on KPFN 105.1 FM, also streamed live:

One Comment

  1. George Dorner November 22, 2018

    Could it be that Ms Ranochak wants her buddies that were chosen to count ballots to make as much money as possible?

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