A wildfire insurance crisis led the California regulators to call for the first-ever statewide non-renewal moratorium. Last week, California Insurance Commissioner Ricardo Lara issued a one-year moratorium banning insurers from dropping policies for homeowners in wildfire-ravaged areas of the state. The state has also asked insurers to stop dropping customers anywhere in California because of fire risk for one year. A voluntary moratorium notice was also issued on non-renewals for residential and commercial property insurance due to wildfire risk statewide.
GONNA CUT YOU DOWN
Commissioner Lara stated the mandatory moratorium covers more than 800,000 residential policies in zip codes within or adjacent to recovering wildfire disasters. The commissioner’s action comes amid growing evidence that homeowner insurance has become more difficult for Californians to obtain from traditional markets. The data provided by insurers revealed the availability of homeowners insurance dropped in high-risk counties. Lara stated he wanted insurers to voluntarily pause non-renewing policies due to wildfire risk to stabilize California’s insurance market and to give them time to work together to find lasting solutions. Both moratoriums expire Dec. 5, 2020. Note – the state cannot force insurers to pick up new customers during the moratorium.
I WALK THE LINE
Insurers need to be able to charge higher rates or stop writing homeowners insurance policies in fire-prone areas, according to an industry representative. As early as 2015, the Dept. of Insurance stop granting rate increases and started to push rates down. Insurers have filed 80 requests for rate increases in 2018. New research shows that the wildfires of 2017 and 2018 alone wiped out a full quarter-century of the industry’s profits with a loss total of $20 billion. Natural disasters in 2017 and 2018 generated $219 billion in payouts worldwide.
Across the country, Florida is dealing with its own climate change issues. Monroe County, the location of the Florida Keys, is initially asking the state for $150 million to raise roads, elevate homes, and even move critical buildings to higher ground. Some officials question if it’s worth spending $128 million to elevate three miles of road where 30 people live. Other alternatives could be establishing water ferries or taxis to raised homes or buying out homeowners. Florida announced the Keys would receive more than $20 million – twice as much as the state originally set aside for the region – to buy out homes damaged by Hurricane Irma and demolish them. Sixty-one people signed up to sell their homes initially, and 10 more people are on the waiting list. We’ll keep reporting on climate change issues and how they affect our industry.
After more than a year, the House Democrats and Trump administration have reached an agreement to move forward with the United States-Mexico-Canada Agreement (USMCA), which updates the North America Free Trade Agreement (NAFTA). The agreement governs more than $1.2 trillion worth of trade among the three nations and affects nearly half a billion North American consumers.
Key provisions of the original USMCA deal remain. In the automobile industry, automobiles must have 75% of their components manufactured in Mexico, the US, or Canada to qualify for zero tariffs (up from 62.5%) and nearly half of automobile parts have to be made by workers who earn at least $16 an hour by 2023. US farmers will have access to Canada’s dairy market and digital trade and intellectual property rules were updated. The revised USMCA deal includes strengthening the enforcement of labor rules, creating a more level playing field for American workers. It also includes mechanisms to settle labor and environmental disputes, and scrapped a provision shielding biologic drugs from generic competitors for 10 years. It’s expected that the Senate will take up the bill after the New Year.
Making Our Way Around the Country
A medical marijuana user who was denied employment with a staffing agency filed a class-action lawsuit, alleging the firm violated Pennsylvania’s Medical Marijuana Act (MMA). The first lawsuit claiming a violation of the MMA challenged an employers’ decision to fire a person who is medically certified to use marijuana to treat a health condition. Both lawsuits hinge on a dispute over whether employers are obligated to abide by the state’s MMA, which says an employer cannot “discharge, threaten, refuse to hire or otherwise discriminate or retaliate against employees solely because they are using marijuana". Some employers contend they are not obligated to do so because marijuana remains illegal under federal law.
The Justice Department has updated its drone policy with new regulations focusing largely on privacy and cybersecurity. The department will be working with the Federal Aviation Administration to develop an air traffic support plan, and the policy will gauge "the potential intrusiveness and impact on privacy and civil liberties" caused by drone cameras and sensors as compared with their benefits. Last month, the DOJ had to ground all 800 of its drones due to cybersecurity concerns involving the footage captured. Just last week in Los Angeles, a drone is suspected of hitting a news helicopter, which had to make an emergency landing after the object ripped through the tail of the helicopter. Scary.
200TH EDITION OF THE WAY
Today we are celebrating our 200th edition of The Way! It has been a pleasure highlighting issues affecting the risk management industry every week. We cannot thank our marketing department, leadership, and most of all our readers, enough for your continued readership!