Total property losses from the Southern California wildfires have not yet been tallied, but Craig Weber and Donald Light, senior analysts at Boston-based financial research and consulting firm Celent said it’s already “go time for insurers.”
According to the analysts, insurers are facing increased pressure to uphold their obligations to policyholders in California, as well as pressure from governmental bodies.
“The lessons from other recent disasters are still fresh in carriers’ minds,” Weber said. “Meeting policyholder expectations is certainly a goal, as it is hard to regain loyal customers once they walk away. But regulators and the courts are also watching to make sure that insurances companies do what they promised to do.”
Weber said meeting legal and regulatory expectations requires insurers to have a disaster response plan in place, and “to execute it with discipline.”
In the meantime, Light said the industry can expect insurance companies to take a hard look at their exposures in areas prone to natural disasters. “While total losses will certainly be lower than a major hurricane or earthquake, homeowners and property owners can expect to pay more for less coverage — if they can get coverage at all,” he predicted.
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