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California Fire Insurance Hinders a Key Goal: Preventing Fires



PG&E CEO Bill Johnson said the company was doing everything possible. It has about 4,500 workers involved in tree maintenance on a daily basis, he said in an interview and 1.8 million trees will be cut or cut by the end of the year. It also changes inspection procedures and improves contractor training, he added.

"This is a huge effort," he said, "and we are learning as we go."

The success of these efforts can help shape how insurers and investors respond to climate risks.

"We're constantly moving towards a future where the private market can conclude that these are insecure risks," said Dave Jones, a former state insurance commissioner. "In some way, this has already happened with utilities."

In July, California deputies approved a plan to create a state-insured insurance fund to accelerate payments to victims after future fires. Homeowners in fire-prone areas reporting their own cancellation of insurance and cost jumps are increasingly turning to secondary insurance markets or government plans, similar to flood insurance, as a last resort.

For utilities, there is no back as a state insurance program. Many turn to expensive alternatives, sometimes sold by offshore companies in places like Bermuda and missing some of the regulation and financial guarantees of conventional policies.

Utilities revenues are still sufficient to attract bidders. For Paul Sousa, owner of California Tree Solutions in San Jose, that meant increasing his insurance to $ 12 million in liability coverage from the $ 2 million he wore as a trimmer for residential trees. But after calculating the initial cost, he said he was confident that his nine-man crew, which makes PG&E fire fighting in Lake County, would pay for gambling.

"If I hadn't been created already, I think I would have disappeared from work," Mr. Sousa said. It also takes longer to get paid by the utility, he said, but it has the advantage of having a customer with hundreds of thousands of miles to clear. "Better job security," Mr. Sousa said. "They need us as much as we need them."


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