Spreading Wildfires
Nov 14, 2018


We begin this week in California, where more than 6,800 structures have been destroyed as three wildfires continue to burn a destructive path. Already the deadliest set of wildfires on record, the blazes have claimed more than 40 lives. The fires are on pace to cause nearly $7 billion in damage across the state. We take a closer look at the risk and insurance impact of the flames.



The state of California estimates that more than one million California homes are at high risk for wildfires. Consumers can purchase fire insurance available through surplus lines. These are policies that protect against financial risks most carriers won't underwrite, but aren't required to follow thef same state insurance regulations. In some cases, the California FAIR plan is available. This state sponsored back-stop covers up to $1.5 million for a structure and its contents in high-risk properties. Commentators note that the availability and consistency of coverage for fire insurance has progressively become an issue for Californians in recent years.



In fact, the number of California homeowner complaints about being dropped from their plans increased threefold from 2010 to 2016. And, consumer complaints about premium hikes also increased by 217% over the same period. Outgoing California Insurance Commissioner David Jones expects more rate increases and more policies to not be renewed, particularly in high-risk fire areas. Commissioner Jones relinquished his position at the DOI earlier this year in a failed bid to become the state’s Attorney General.



This week, State Senator Ricardo Lara narrowly defeated former commissioner Steve Poizner by 2-percentage points to lead the DOI. Commentators in California pegged wildfire risk and insurance as a central issue in the race for the state’s top insurance regulator. As a lawmaker, Senator Lara drafted and supported policyholder initiatives including: legislation to reverse and mitigate the effect of personal injury from wildfires, expansive measures to protect home and contents coverage in wildfires, and single payer healthcare principles for health care coverage. We will continue to follow this multiple-alarm story.


Environmental Risk Management

CH4 & N20

The Environmental Protection Agency (EPA) is taking public comment on a final rule to reduce the frequency that oil companies must inspect drilling and production equipment for leaks of methane, the principal component of natural gas. Opponents to the rule argue that the administration’s proposal runs counter to steps by Mexico and Canada to reduce oil and gas methane emissions to meet a trilateral North American commitment to reduce emissions by 45 percent by 2025. The EPA also announced plans to propose new rules to significantly decrease emissions of smog-forming nitrogen oxide from diesel-powered heavy-duty trucks. Industry groups and state environmental officials have urged the EPA to set new nationwide rules as the state of California has been moving forward with plans to set new state emissions limits.



Finally, the EPA is also proposing to change the regulatory definition of “ambient air,” a term used in the quantification of air quality for various permits and safe use standards. Currently, ambient air reflects "that portion of the atmosphere, to which the general public has access." Ambient air exempts outdoor areas over land owned or controlled by a pollution source, to which public access is precluded by a fence or other physical barriers. In newly released draft guidance, the EPA seeks to replace "a fence or other physical barriers" with a more expansive rendering: "measures, which may include physical barriers that are effective in deterring or precluding access to the land by the general public."


Making Our Way Around the Country


As election tallies continue to roll in across the nation, the results of last week’s Election Day have been refined. In the House of Representatives, the Democratic Party gained 32 seats, to hold a 227-208 majority. Pundits expect the Democrats to gain between 35 and 40 once all the counting is complete. Arizona election officials declared Kyrsten Sinema the winner in her bid to become the state’s first female U.S. Senator. The GOP net one or two seats, rather than three or four as anticipated on Election Day, and still holds the majority in the Senate.



The Bureau of Labor Statistics published the first of two reports on 2017 occupational safety and health statistics. In the first one, BLS reported there were about 2.8 million non-fatal workplace injuries and illnesses in private industry during 2017, with 882,730 of them resulting in days away from work -- a number that was basically unchanged from 2016. The 2017 rate of total recordable cases improved slightly. In 2017, it was 2.8 cases per 100 FTE workers, down from 2.9 the year before. The second release will be published in December 2018 and will provide results from the Census of Fatal Occupational Injuries for all fatal work injuries in the United States during 2017.



Attorney General Jeff Sessions delivered his resignation letter to the White House at the request of the president this week. The White House announced its intention to name Matthew G. Whitaker, Chief of Staff to Attorney General Jeff Sessions, as the new Acting Attorney General of the United States. The state of Maryland is challenging the Trump administration’s move in court. We will continue to follow this story as the DOJ will play a critical role in marijuana enforcement, investigation of civil rights infractions at local law enforcement level, and the future of the inquiry led by the special counsel, Robert S. Mueller III.


Yesterday was #WorldKindnessDay. One of our great joys in preparing The Way each week is the opportunity to read stories of compassion, collaboration, and kindness in our industry. In the wake of the devastating fires and the heroic efforts of first responders, we’ve seen countless examples of charitable and selfless service to those affected by the blazes and those courageously fighting them. To all of our readers affected by this week’s wildfires, please be safe, and know we are thinking of you. 


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