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California wildfire insurance pricing shifts from individual to collective risk
Brokers say carrier pullbacks in wildfire exposed areas have reduced the value of a claims free renewal pitch, replacing it with explanations of a broader statewide market.
California brokers are losing a key sales lever as wildfire focused carrier appetite pushes pricing away from a homeowner's individual claims record and toward the collective performance of every insurer writing business in the state, according to Insurance Business.
Rajni Kapur, a broker and principal at All Solutions Insurance Agency in Moreno Valley, said that means brokers can no longer secure renewals by pointing to a client's clean loss history, and instead must explain a market driven by how carriers collectively are absorbing wildfire losses in California.
Kapur said the shift changes what brokers are selling, because a price increase on a claims free risk is no longer just about one account, but a reflection of statewide wildfire experience that affects rate setting regardless of an individual policyholder's history.
Insurance Business reports that brokers now face a harder conversation, since the traditional role of showing that a well run risk earns a better rate is less available as pricing expectations move toward broader collective outcomes.