Passage of proposed amendments to Ashland’s Wildfire Mitigation Ordinance shouldn’t affect home insurance rates, but widespread losses due to an increasing number of disastrous fires in the West could affect availability and cost over the long term, according to those in the insurance industry interviewed by the Tidings.
The zoning change, which would expand the city’s wildfire hazard zone — and its more stringent requirements for firesafe standards for new development — to the entire city, would take affect after the council votes twice to approve it. The first reading of the ordinance is on the agenda for Tuesday’s council meeting.
According to Greg White, owner of Reinholdt and O’Harra Insurance in Ashland, there are different rating factors insurance companies use to determine rates and policy availability. One is the Insurance Service Office (ISO) rating, which recently went down from a four to a three in Ashland, reducing premiums for homeowners.
“But they do look at wildfire risk as well,” White said. “What would happen is, I don’t think homeowners’ rates would go up, I think what will happen is that fewer companies will be willing to actually write insurance in the town.”
White said he recently had a customer on the top of Morton Street, surrounded by forest, who had a difficult time getting insurance because the companies White works with denied coverage for the house due to the heightened risk.
“Companies are taking a much harder look at all of this now, especially since all of the wildfire losses in California,” White said. “Things are going to change, no doubt.”
The president of the nonprofit organization Northwest Insurance Council, Kenton Brine, said there are high-risk pockets along the West Coast that insurance companies are pulling away from because of losses suffered from wildfire damages, but because of the hundreds of insurance companies, all homeowners should be able to find coverage.
White said even when homes may be affected, there are higher-risk companies that can provide insurance. But these high-risk policies can be double or more the cost of a preferred rate.
White also said homes in town, not as close to the forest, won’t be impacted as much because each policy is dependent on individual structures and their unique risk factors.
At the Wildfire Mitigation Ordinance public forum held on Aug. 6, Brandon Goldman, a city of Ashland senior planner, said he asked four insurance providers if the expansion of the wildfire lands overlay would trigger an increase in insurance rates.
“Essentially, I was told that the insurance providers all have different formulas that they look at they may do an on-site assessment of the property,” Goldman said. “If it has a metal roof, that’s a positive. If it has fuels removed from around the building, that’s seen as a positive to allow them to underwrite insurance on that property, so really this gets to whether they’ll issue a policy on a property.”
He also said these insurance companies indicated that a wildfire hazard zone as a local designation didn’t have as much of an impact as the individual site assessment, the ISO rating and the individual models that they use to categorize the wildfire risk or other risk factors.
Chris Chambers, chief of the city Division of Forestry, said that the ISO factor is a single aspect of many available that insurance companies generally use to determine rates. The scale ranges from the best (one) to the worst (10). He said Ashland, currently a three, even has a possibility of lowering to a two or one on that scale as safety improves.
“The whole ISO discussion is one piece of that puzzle,” Chambers said. “We don’t control how insurance companies map their risks. And if they choose to not renew coverage or deny coverage in an area due to wildfire risk, it’s not because the city has changed its rule, it’s because they would be doing that anyway. So, the two processes, the city adopting this code and insurance policies being reviewed, are two totally separate things.”
Ashland and Jackson County are both considered low risk areas to Nationwide Insurance, according to David Gilligan, a communications consultant for the company. He said the company will still cover Ashland and rates won’t be affected by the ordinance.
“Nationwide continues to provide coverage in Ashland, Oregon for home, auto, commercial and our other insurance offerings,” Gilligan said. “We employ our own process of assessing risk when writing new policies and renewing existing policies, and this governmental distinction does not impact our decision to provide coverage.
“For the past several years, Nationwide has proactively inspected homes to ensure members take appropriate steps to mitigate their property against the risk of wildfires. We know these mitigation efforts work,” Gilligan said. “Recently, a member near one of the wildfires in northern California reported that they were able to avoid major damage from the flames after implementing our fire-mitigation tips.”
The city of Flagstaff, Arizona, has been determined a wildfire hazard zone by the reinsurance companies, according to a longtime insurance agent there who asked not to be identified because of a concern it would endanger her employment. She said certain zip codes and areas have a higher risk and homeowners in those areas have a harder time finding insurance companies that will take on the risk. If anything, residents can go to surplus lines for coverage, but they’re very expensive, may have limited coverage and may not be with an admitted carrier.
Brine, the Northwest Insurance Council president, said smaller insurance companies that maybe don’t have the funds to offset a huge loss from a wildfire are pulling away from high-risk areas on the West Coast.
“It’s highly individualized from the standpoint of the insurers, but it’s also going to be determined by the risk that’s presented to them,” Brine said. “The simple fact that an area has been declared from some entity to be a wildfire risk won’t in and of itself impact (rates). What impacts insurers typically is experience, so if you’re living in an area that hasn’t been declared a wildfire hazard zone, but has a lot of wildfires, that makes a bigger difference to the insurer than the declaration.”
He said the greater wildfire risk is due to the combination of climate change, population growth and the expansion of the wildland-urban interface, which is causing companies to reevaluate insuring areas at high risk.
“It is important for people to not panic when they learn that this is a designation for Ashland and that it might have an impact on their existing insurance policy because it won’t be 300 companies that say we’re not going to write insurance in Ashland,” Brine said. “Some companies may choose that, some companies may respond with different ratings, but there are hundreds of insurance companies writing.”
The City Council business meeting starts at 7 p.m. Tuesday, Aug. 21, in the Council Chambers at 1175 E. Main St.