Indy Digest: May 29, 2023
California is now feeling another effect of climate change: One of the country’s largest insurers has decided not to do a big chunk of business here, thanks in part to wildfire risks.
State Farm has ceased new applications, including all business and personal lines property and casualty insurance, starting Saturday, the company announced in a press release.
Existing customers will not be affected, and the company will continue to offer auto insurance in the state, according to the release.
The insurance agency cited “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market” for its decision.
State Farm said while it takes its responsibility to manage risk “seriously” and will continue to work with state policymakers and the California Department of Insurance to help build market capacity in California, the decision was necessary to ensure the company remains in good financial standing.
The story later says: “Rebuilding from wildfire destruction is expensive, experts have found. The reconstruction costs from the 2022 Coastal Fire in Southern California were estimated to be $530 million, and only 20 homes were destroyed, according to a report by property solutions firm CoreLogic. In addition, the nationwide impact of California’s 2018 wildfire season—which included the Camp Fire, the most destructive in California history—totaled $148.5 billion in economic damage, according to a study by the University College London.”
There’s another contributing factor to State Farm’s decision: State regulations. A San Francisco Chronicle story (subscription required) on State Farm’s decision said:
A UC Berkeley study last year warned that insurance companies were underestimating the cost of wildfire risks and judging risks lower than the state. The authors said the findings suggested that the financial firms “could soon find their own businesses financially wrecked, unless their risk models and pricing (and the government regulations overseeing both) undergo dramatic changes.”
(Rex Frazier, president of the Personal Insurance Federation of California) said that companies must get approval from the state to raise insurance rates, which can take six months, but that process can’t keep up with rapidly rising inflation costs.
The state, for what it’s worth, pointed out that Californians still have plenty of options for insurance. Also from the Chronicle piece: “Michael Soller, spokesperson for the California Department of Insurance, said in an email Saturday that state data shows that the number of companies writing homeowners insurance has stayed consistent over the past five years—at about 115. ‘While insurance companies prioritize their short-term financial goals, the long-term goal of the Department of Insurance is protecting consumers,’ Soller said. ‘The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry, and global inflation.’”
As climate change worsens, we’ll inevitably see more business decisions like this. A quote from Noah Diffenbaugh, a climate scientist and professor at Stanford University, in a Washington Post article about State Farm’s decision, sums things up: “What’s becoming increasingly clear is that the gap between what’s happening and what we’re prepared for is getting wider and wider.”
—Jimmy Boegle
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More News
• In order to get a debt-ceiling deal, President Biden agreed to something that has environmentalists ticked off. The Washington Post says: “President Biden and House Republicans have agreed to expedite permitting for the Mountain Valley Pipeline, a project that is key to the West Virginia delegation as the president and House Speaker Kevin McCarthy (R-Calif.) seek to woo lawmakers across the capital. Sen. Joe Manchin III (D-W.Va.). has previously demanded White House support for the project in exchange for his vote, and other Republicans, including West Virginia Sen. Shelley Moore Capito, praised the pipeline provisions included in the legislation. It is another White House concession to Manchin, who has long championed the 303-mile pipeline, which would carry West Virginia shale gas to the East Coast but has been tripped up by dozens of environmental violations and a slew of court fights. Environmentalists have fought the project since its inception, and the new provisions aims to block them from challenging almost all government approvals for the line to cut across federal forests and dozens of waterways in Appalachia’s hilly, wet terrain.”
• The Los Angeles Times takes a look at the state’s failed attempts to regulate “crisis pregnancy centers”—anti-abortion clinics that often say misleading and inaccurate things to prospective patients: “The centers, primarily faith-based nonprofits, have managed to evade legislative attempts at stricter regulation, which the Supreme Court ruled violated the 1st Amendment. Two state bills to limit them quietly stalled this month, even as the latest package of abortion access laws is otherwise expected to succeed. Though the issue has become a legal minefield, California Democrats who have vowed to make the state a reproductive rights haven aren’t giving up. … The industry has gotten harder to regulate as it has moved away from the ‘egregious’ misrepresentations that it was built on, (state Attorney General Rob) Bonta said. ‘They’re moving into more of a gray and ambiguous space, where they’re saying things like, “Come in and talk to us about abortion options,”’ Bonta said. ‘It’s not necessarily false, it might be misleading, but it’s not a black or white violation.’”
• Here’s news article No. 876,906 showing that COVID-19 is still a thing. This one’s from Time magazine, with the headline “China Might Have 65 Million COVID Cases a Week by June. How Worried Should the World Be?” A snippet: “With the virus continuing to circulate in China coupled with a waning public immunity, the possibility of a new, more dangerous sub-variant emerging still exists, (epidemiologist Catherine) Bennett adds, although the likelihood is much smaller now. The latest mutations in the genetic makeup of the SARS-CoV-2 virus have not been significantly different from the last major variant, Omicron, and the symptoms of infections are relatively milder. ‘It’s somewhat reassuring, thus, now a year and a half into Omicron, that we haven’t seen a major shift that’s either undermined our immunity, our testing capability, and importantly, antivirals,’ Bennett adds.”
• Related: CNN reports on another virus that’s made a lot of people sick, even though you’ve likely never heard of it: “Cases of human metapneumovirus, or HMPV, spiked this spring, according to US Centers for Disease Control and Prevention’s respiratory virus surveillance systems. It filled hospital intensive care units with young children and seniors who are the most vulnerable to these infections. At its peak in mid-March, nearly 11% of tested specimens were positive for HMPV, a number that’s about 36% higher than the average, pre-pandemic seasonal peak of 7% test positivity. … Studies show that HMPV causes as much misery in the U.S. each year as the flu and a closely related virus, RSV. One study of patient samples collected over 25 years found that it was the second most common cause of respiratory infections in kids behind RSV. A study in New York conducted over four winters found that it was as common in hospitalized seniors as RSV and the flu. Like those infections, HMPV can lead to intensive care and fatal cases of pneumonia in older adults.”
• Coming off the slow-news Memorial Day weekend, we’ll conclude with brief mentions of two cool events happening this week. First up is a Q&A and screening of the horror film Half Sisters, with director Devin Fei Fan Tau; it’s taking place at Mary Pickford Is D’Place in Cathedral City, at 7 p.m., Wednesday, May 31. According to the theater website: “Two half-sisters have detested each other since birth. … When they both turn up at the cabin their eccentric grandmother has left them in her will, the sisters’ bickering is soon overshadowed by an even greater menace. Trapped by unknown assailants in the dark of the night, they must choose between self-preservation at all costs and a combined effort to escape. The next few hours will determine whether blood, even half blood, is thicker than water. Devin is a gay, Asian-American filmmaker whose storytelling reflects his reaction to nearly four decades of cultural silence imposed on him by both his native and adopted cultures from his earliest years as an immigrant to the United States. This is Devin’s third feature film and first narrative, (after releasing) the documentary ‘Who’s on Top?’ (2021) narrated by George Takei which is now available worldwide, and the feature documentary ‘The Road Home.’” Tickets are $11.95 for reserved seats.
• And finally … the Independent’s own Bonnie Gilgallon will pay tribute to Dusty Springfield at 7 p.m., Friday, June 2, at the Palm Springs Cultural Center. From the website: “Bearing a striking resemblance to the iconic singer, Bonnie brings to life some of Dusty’s greatest hits like ‘The Look of Love,’ ‘Son of a Preacher Man,’ ‘I Only Want to Be With You,’ ‘Wishin’ And Hopin’’ and more. Bonnie will be joined by a special guest, the charismatic Gregg Marx.” Tickets are $20.
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