Pandemic-proofing: Insurance may never be the same again

By Noor Zainab Hussain

(Reuters) – Insurers are creating products for a world where virus outbreaks could become the new normal after many businesses were left out in the cold during the COVID-19 crisis.

While new pandemic-proof policies might not be cheap, they offer businesses from restaurants to film production companies to e-commerce retailers ways of insuring against disruptions and losses if another virus strikes.

The providers include big insurers and brokers adding new products to existing coverage, as well as niche players that see an opportunity in filling the void left by mainstream firms that categorize virus outbreaks like wars or nuclear explosions.

Tech firm Machine Cover, for example, aims to offer policies next year that would give relief during lockdowns. Using apps and other data sources, the Boston-based company measures traffic levels around businesses such as restaurants, department stores, hairdressers and car dealers.

If traffic drops below a certain level, it pays out, whatever the reason.

“This is the type of coverage which … businesses thought they had paid for when they bought their current business interruption policies before the coronavirus pandemic,” the company’s founder Inder-Jeet Gujral told Reuters.

“I believe this will be a major opportunity because post-COVID, it would be as irresponsible to not buy insurance against pandemics as it would be to not buy insurance against fire.”

The company is backed by insurer Hiscox and individual investors, mostly from the insurance and private equity world.

Restaurants in Florida’s Miami-Dade County, where Mayor Carlos Gimenez on Monday ordered dining to shut down soon after reopening, are now reeling, said Andrew Giambarba, a broker for Insurance Office of America in Doral, Florida.

“It’s been like they made it to the ninth round of the fight and were holding on when this punch came out of nowhere,” said Giambarba, whose clients include restaurants that did not get payouts under their business interruption coverage.

“Every niche that is dealing with insurance that is affected by business interruption needs every new product they can have.”

FILLING THE VOID

Pandemic exemptions have helped some insurers emerge relatively unscathed and the sector has largely resisted pressure to provide more virus cover. Indeed, some insurers that paid out for event cancellations and other losses have removed pandemics from their coverage.

British risk managers association Airmic said last week that the pandemic had contributed to a lack of adequate insurance at an affordable price and most of its members were looking at other ways to reduce risk.

To help fill the void in a locked-down world, Lloyd’s of London insurer Beazley Plc, started selling a contingency policy last month to insure organizers of streamed music, cultural and business events against technical glitches.

“These events are completely reliant on the technology working and a failure can be financially crippling,” said Mark Symons, contingency underwriter at Beazley.

Marsh, the world’s biggest insurance broker, has teamed up with AXA XL, part of France’s AXA, and data firm Arity, which is part of Allstate, to help businesses such as U.S. supermarket chains, restaurants and e-commerce retailers cope with the challenges of social distancing.

With home deliveries surging, firms have hired individual drivers to meet demand, but commercial auto liability insurance for “gig” contractors with their own vehicles is hard to find.

Marsh and its partners devised a policy based on usage with a price-by-mile insurance, which can be cheaper than typical commercial auto cover as delivering a pizza doesn’t have the same risks as driving people around.

“Even when the pandemic is over, we believe last-mile delivery will continue to grow,” said Robert Bauer, head of Marsh’s U.S. sharing economy and mobility practice.

A report by consultants Capgemini showed that demand for usage-based insurance has skyrocketed since COVID-19 first broke out and more than 50% of the customers it surveyed wanted it.

However, only half of the insurers interviewed by Capgemini for its World Insurance Report said they offered it.

BESPOKE COVER

Since businesses are only now learning how outbreaks can affect them, some new products are effectively custom-made.

Elite Risk Insurance in Newport Beach, California, has been offering “COVID outbreak relapse coverage” since May for businesses forced to shut down a second time, its founder Jeff Kleid said.

The policies are crafted around specific businesses and only pay out when certain conditions are met, Kleid said.

For film and television production companies that could be when a cast member contracts the virus, forcing them to stop shooting. Another client, which raises livestock for restaurants, is covered for a scenario in which it would be impossible to get animal feed.

Such policies do not come cheap. A $1 million policy could cost between about $80,000 to $100,000 depending on the terms.

“The insurance … is costly because it covers a risk that does not have a historical basis for calculating the price,” Kleid says.

And in March, when COVID-19 ravaged northern Italy, Generali’s Europ Assistance offered medical help, financial support and tele-consultations for sufferers when discharged from hospital, on top of regular health insurance.

It sold 1.5 million policies in just two weeks and now has 3 million customers in Europe and United States.

Some insurers are also working on changes to employee compensation and health insurance schemes. With millions of workers not expected to return to offices anytime soon, some large insurers in Asia are preparing coverage to account for that, according to people familiar with those efforts.

At least one Japanese insurer has started work on a product to cover employees for injury while working at home, they said.

“Working from home will be the new normal for years to come. That would make the scope of the employee compensation scheme meaningless if a person suffers an injury while at home,” said a Hong Kong-based senior executive at a European insurer.

(Reporting by Noor Zainab Hussain in Bengaluru, Suzanne Barlyn in Washington Crossing, Pennsylvania, Carolyn Cohn in London and Sumeet Chatterjee in Hong Kong; Additional reporting by Muvija M; Editing by Tomasz Janowski and David Clarke)

Factbox: Insurers return part of auto premiums as coronavirus cuts driving

(Reuters) – Major U.S. insurers are offering credit to auto and motorcycle policyholders following a decline in driving, as most Americans stay at home under widespread orders to help contain the spread of the novel coronavirus.

Following is a list of companies that have offered to return premiums.

ALLSTATE CORP

Allstate, one of the largest U.S. auto insurers, said on Monday it would return more than $600 million in premiums to customers. Most customers will receive a “payback” of 15% of their monthly premium in April and May, the company said.

AMERICAN FAMILY INSURANCE

The auto insurer said it would return a total of $200 million to auto insurance customers beginning in mid-April. Customers will receive $50 per vehicle covered by their policies, the company said.

AVIVA CANADA

Aviva Canada said it was offering $100 million in additional immediate relief measures to drivers, including options that would reduce insurance premiums. Customers who have stopped driving entirely could reduce their auto insurance premiums by up to 75%.

CHUBB

The world’s largest-listed property and casualty insurance company said it will give personal auto insurance clients in the United States credit on annual renewal premiums, reflecting a 35% cut for the months of April and May.

ERIE INSURANCE

The insurer said it would reduce rates for personal and commercial auto insurance customers in 12 states and the District of Columbia. It estimated the amount of financial relief for Erie Insurance customers to be about $200 million.

FARMERS INSURANCE

Farmers and 21st Century-branded auto customers will receive a 25% reduction in their April premium. The insurer said it has also implemented flexible payment plans and a temporary pause on cancellations.

GEICO

Geico Corp, part of billionaire Warren Buffett’s Berkshire Hathaway Inc , said it will offer about $2.5 billion of credits to its 19 million auto and motorcycle policyholders. The insurer said it will offer a 15% credit on policies up for renewal between April 8 and Oct. 7, averaging about $150 per auto policy and $30 per motorcycle policy.

HANOVER INSURANCE GROUP

The company said  it will return 15% of April and May auto premiums to its eligible personal lines customers. Hanover will also offer flexible bill payment options.

LIBERTY MUTUAL INSURANCE

Liberty Mutual Insurance will give personal auto insurance customers a 15% refund on two months of their annual premium, returning about $250 million to Liberty Mutual and Safeco personal auto insurance customers.

METLIFE

The company said it is providing financial relief and preserving coverage in the event of missed payments. Active MetLife auto customers, who have paid to date, will receive a 15% credit for April and May based on their monthly premiums.

PROGRESSIVE INSURANCE CORP

Among the largest U.S. auto insurers, Progressive said it would provide about $1 billion to personal auto customers. The company will credit eligible customers 20% of their April and May premiums.

STATE FARM

The largest U.S. auto insurer said it would pay $2 billion in dividend to its customers, with premium credit of about 25% for the period between March 20 and May 31.

TRAVELERS COMPANIES INC

The insurer said  it was giving U.S. personal auto insurance customers a 15% credit on their April and May premiums through its new stay-at-home auto premium credit program. It said it will continue to provide auto coverage to customers whose jobs include using their personal vehicles to make food, grocery, pharmacy and medical supply deliveries.

USAA

USAA, America’s fifth largest property-casualty insurer, said  it will return $520 million to its members. Every member with an auto insurance policy in effect as of March 31 will receive a 20% credit on two months of premiums in the coming weeks.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Aditya Soni, Leslie Adler, Stev Orlofsky and Shinjini Ganguli)

California puts one-year halt on insurers dropping customers in wildfire-prone areas

By Andrew Hay

(Reuters) – California on Thursday ordered a one-year halt on insurance companies dropping customers in wildfire-prone areas at a time when state insurers are trying to limit spiraling costs from climate change.

The moratorium, the first of its kind in the state, affects about 800,000 homeowners in areas hit by 2019 wildfires. State Insurance Commissioner Ricardo Lara also asked insurers to voluntarily stop cancelling clients in other areas at risk to wildfire.

“I am calling on insurance companies to push the pause button on issuing non-renewals for one year to give breathing room to communities and homeowners,” Lara said in a statement.

The moratorium, which ends Dec. 5, 2020, is meant to draw insurers and state legislators to the negotiating table to find a solution to the state’s wildfire insurance dilemma.

The measure still leaves tens of thousands of rural homeowners dealing with insurance cancellations and rate increases after the state’s deadliest wildfires killed over 100 people and destroyed tens of thousands of homes and structures in 2017 and 2018.

The insurance industry is retreating from at-risk areas after paying nearly $25 billion in damage claims for the record fire years, according to California Department of Insurance data.

Fires in 2017 alone wiped out a decade of underwriting profits for state insurers, according to John Norwood, a Sacramento lobbyist for insurance firms.

At the same time, California’s homeowner insurance premiums remain below the national average, ranked 32nd in state terms in 2016, according to the National Association of Insurance Commissioners.

Rex Frazier, president of the Personal Insurance Federation of California, likened the situation to an auto insurer thinking it was insuring stable, 50-year-old drivers.

“In fact, they’re insuring a bunch of 16-year-olds hopped up on Red Bull doing social media postings while they’re driving,” said Frazier, citing California’s high risk of wildfires.

Reinsurers that provide insurers financial protection are raising rates based on climate-change exposure and state insurance companies need to adjust risk levels, rates or both to continue covering fire-prone areas, he said.

The state’s insurance commissioner cited evidence, however, that homeowner insurance had already become difficult for many Californians to obtain from traditional providers, forcing them into expensive, less comprehensive options like the state’s “insurer of last resort” FAIR Plan.

Among other goals, Lara is looking for legislation to require insurers to provide coverage to customers and communities that have taken steps to mitigate wildfire risks.

(Reporting by Andrew Hay in Taos, New Mexico; Editing by Bill Tarrant and Peter Cooney)

Rising U.S. losses from powerful hurricanes flag need for better protection

A police car is submerged in New Orleans East August 31, 2005 after Hurricane Katrina hit the area. Authorities struggled on Wednesday to evacuate thousands of people from hurricane-battered New Orleans as food and water grew scarce and looters raided stores, [while U.S. President George W. Bush said it would take years to recover from the devastation.]

Rising U.S. losses from powerful hurricanes flag need for better protection
By Anna Scholz-Carlson

LONDON (Thomson Reuters Foundation) – Only a few U.S. states are taking significant steps to reduce hurricane risks, as a study this week showed the most damaging storms are now three times as frequent as a century ago and have become the costliest type of disaster, scientists said.

Using a new method, a team at the University of Copenhagen’s Niels Bohr Institute found the frequency of the worst hurricanes had increased 330% over the last century in the United States.

But many government authorities in the country remain unprepared to deal with the surging risk, said Natalie Peyronnin Snider, senior director of coastal resilience for the Environmental Defense Fund (EDF), a U.S.-based advocacy group.

Getting ready would require policy and ground-level changes, including efforts to boost coastal protection, she said.

In a study published in the journal Proceedings of the National Academy of Sciences of the United States of America (PNAS), University of Copenhagen scientists looked at parts of the United States hit by hurricanes in the last century, analysing changes in wealth and population densities to compare losses over time.

Previous research suggested the growing costs of damage from storms were largely due to costlier infrastructure and homes in their path, rather than a rise in the strength or frequency of hurricanes themselves, said Aslak Grinsted, a study lead author.

But the new work showed the growing number of powerful hurricanes was the key factor in increasing losses, he said.

Having clearer information should help communities plan ahead to curb losses, he told the Thomson Reuters Foundation.

Louisiana is one of the few states that has a comprehensive plan to deal with a growing hurricane threat, said EDF’s Snider.

In 2012, it launched a $50-billion Coastal Master Plan to elevate homes with severe flooding risk, create more wetlands, restore marshes and create rock breakwaters to better protect communities from surging storms.

The effort aims to help the southern state better weather hurricanes over the next 50 years, according to the Louisiana Coastal Protection and Restoration Authority website.

The plan was in part a response to severe losses from Hurricane Katrina in 2005, it noted.

Snider said using natural systems to curb hurricane risk – such as wetlands that can absorb excess water and prevent flooding or oyster-covered reefs to absorb wave energy – are cost-effective ways to curb damage from powerful hurricanes.

But Louisiana is not the only state looking to lower its hurricane risks.

In New York, a community-led project aims to restore 1 billion live oysters to New York Harbor by 2035, in part to tackle storm threats, according to its website.

Still, federal and state governments need to do more to protect their people, assets and ecosystems, Snider said.

“It’s really important that we start to be proactive and aggressive … in building resilience in our systems, which not only pays off financially but also for the health of communities,” she said.

Each dollar spent to cut disaster risk can save six dollars otherwise spent recovering after a disaster, she added.

(Reporting by Anna Scholz-Carlson; editing by Laurie Goering and Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit http://news.trust.org/climate)

Change in New York State law to usher in ‘tidal wave’ of child sex abuse lawsuits

New York Governor Andrew Cuomo speaks during a news conference in New York, U.S., September 14, 2018. REUTERS/Shannon Stapleton

By Tom Hals

(Reuters) – Thousands of child sexual abuse lawsuits are expected to flow into New York State courts in the coming weeks exposing decades-old misconduct at schools, hospitals, churches and youth clubs, according to lawyers for victims.

On Aug. 14, the Child Victims Act takes effect, giving people one year to sue over allegations of sexual abuse, regardless of when they said it occurred.

Under the law signed by Governor Andrew Cuomo in February, New York has gone from one of the toughest states to bring a case because of its strict statute of limitations to one of the easiest, potentially unleashing decades of unresolved claims.

“It’s going to be a tidal wave of litigation,” said lawyer Mitchell Garabedian, best known for representing victims of child abuse by Roman Catholic priests in the Archdiocese of Boston.

Cases will cut across society, illustrating the systemic nature of the abuse, victims’ lawyers said, although they expect many of the lawsuits to be against Catholic organizations and the Boy Scouts of America.

Both the scouts and the church said they were cooperative with people making allegations of abuse against their organizations.

“We believe victims, we support them, we pay for counseling by a provider of their choice, and we encourage them to come forward,” the Boy Scouts of America said in a statement.

New York State Catholic Conference spokesman Dennis Poust said that Catholic leaders dropped opposition to the new law once it was broadened to include public institutions.

“All survivors deserve to be heard,” Poust said.

The Child Victims Act arrives as victims have been empowered by the #MeToo movement and a steady stream of scandals, exposing a range of abusers from public figures to the team doctor of USA Gymnastics.

Lawyers for victims said they were teaming up to maximize resources and reconnecting with old clients whose cases were barred by the statute of limitations.

Jeff Anderson, who specializes in clergy sex abuse cases, said his law firm has dedicated almost 100 people to New York cases.

‘COME FORWARD’

After several states made it easier to sue, TV ads soliciting child sex abuse lawsuits spiked to more than 1,700 in both March and April, up from just 46 in January, according to X Ante, a consulting firm that tracks lawyer ad spending.

“If you were abused in a scouting program you are not alone,” said an ad by San Diego, California-based AVA Law Group, which X Ante said was one of the most frequently broadcast. “Come forward. New laws may allow you a path to significant financial compensation.”

However, victims and advocates often say the money is secondary, and many sue to expose perpetrators, hold organizations accountable and to further the healing process.

Some organizations, including the Boy Scouts of America, are acknowledging abuse, apologizing and reporting the accused to law enforcement authorities.

Others have offered compensation. The Archdiocese of New York has paid $65 million to 325 people since 2017. Only one person rejected an offer, according to the archdiocese.

Those who accept an offer give up their right to sue. Some victim advocates said compensation programs kept stories of abuse secret.

“I think the potential is huge for all kinds of things coming to the surface like we’re seeing with Epstein,” said victims’ attorney James Marsh, referring to the criminal sex trafficking charges against the once politically connected American financier Jeffrey Epstein. He pleaded not guilty and is jailed pending trial.

Victims’ lawyers said insurance policies will provide a significant amount of money. The Archdiocese of New York and the Boy Scouts of America have already become embroiled in disputes over insurance coverage.

The Travelers Cos have said they are planning to bolster reserves related to laws reviving old abuse claims.

Coordinating scores of lawsuits against an organization could also be difficult, although few New York cases are expected to go to trial.

Many lawyers said they expect organizations to file for bankruptcy, which would stop the litigation and create one forum where all the claims can be settled at once.

“Bankruptcy is the way to go,” said lawyer Tim Kosnoff, who specializes in cases against the Boy Scouts. “Most clients come out of it pretty satisfied.”

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and Grant McCool)

YOUR MONEY: Renovating after a natural disaster? Planning is key

FILE PHOTO: Damage caused by Hurricane Michael is seen in Mexico Beach, Florida, U.S., October 16, 2018. REUTERS/Terray Sylvester/File Photo

By Beth Pinsker

NEW YORK (Reuters) – For the Parkers of Houston, Texas, there will be no summer vacation this year because they are still paying off the dent in their finances left by 2017’s Hurricane Harvey.

The couple joins a growing list of people forced to renovate or completely rebuild their homes after a natural disaster, as severe weather events wreak damage throughout the country and spending in their wake drags out over multiple years.

Fixing up homes after a natural disaster barely used to register in home renovation data. A new survey released June 5 by the home site Houzz.com shows that 6% of home renovators in 2018 were addressing damage from a natural disaster, which jumps to 12% for such renovations over the past five years.

Regionally, those numbers are continuing to climb, said Nino Sitchinava, Houzz principal economist, particularly for California, Texas and Florida.

The Joint Center for Housing Studies of Harvard University has also been looking into the impact of natural disasters on the home renovation market.

“We’ve been studying home improvement for 25 years and losses from national disasters haven’t been on the radar. Suddenly, we’re seeing this pop up as a significant share,” said Kermit Baker, director of the remodeling future program at the Harvard center.

In 2016-2017, the most recent year reported by the center, spending on disasters repairs exceeded $27 billion in the United States, against $14 billion in 1996-1997.

Preparing for a disaster is drastically different than paying for a planned kitchen makeover.

“You have to prepare, prepare, prepare. Whatever that means, to you – do it,” warned William Begal, an independent consultant based in the Washington, D.C. area who ran a renovation company for 18 years.

PAYING THE PRICE

The Parkers now know all of this first hand. When their house in the Linkwood neighborhood flooded, there were some things they needed to do right away, yet they are still spending two years later.

The presence of water means you have to move fast. They had to rip out carpet and drywall themselves, and then hire a crew out-of-pocket before any insurance adjustor came around.

They also could not live in their house while it was being fixed, so they forked out $3,000 a month for a rental.

Once the insurance kicked in, they received a small sum from an escrow account a few weeks after the flood, and then had to wait for the project to be 50% complete before they got more. They did not get the final payment until the project was done.

“It was key we had stashed away an emergency fund so we were not spiraling downward,” said Angie Parker, 38, who is a personal fitness trainer in the Houston area.

Parker said she spent many hours on the phone with the insurance company, crying sometimes, being aggressive when she had to be.

Luckily, the family had flood insurance, which was a requirement for their mortgage in a flood-prone neighborhood.

Most people, however, do not have flood insurance, and this further delays rebuilding efforts.

Yet, there were still issues. An inadvertently checked box on a form meant the contents of their house were not covered. So they were out more than $100,000 for furniture, clothing and housewares, and lost all their appeals to have those covered.  

Jerry Linebaugh, an investment advisor representative who owns JLine Financial near Baton Rouge, Louisiana, had a similar experience when his office flooded after a rain event in 2018 that was not even a named storm – just heavy rain over three days.

“You have to have a cash reserve, you have to have your insurance in line, you have to do disaster drills,” said Linebaugh, who had planned for the worst ever since Hurricane Katrina hit nearby.

Linebaugh had a system set up to transfer his office lines to cell phones and keep his operations going from hotel rooms and his employees’ homes.

He had six months of operating expenses to float his business. And he needed all it, because he did not have flood insurance.

It was four months before Linebaugh won an appeal with his business insurance policy to cover losses based on an inland marine clause, which worked for him because the damage started with water coming in through a bathroom drain.

“Probably thousands of people didn’t get that claim check because they didn’t know about that,” said Linebaugh.

(Editing by Lauren Young and Bernadette Baum)

Forest fire insurance costs soar

FILE PHOTO: A group of U.S. Forest Service firefighters monitor a back fire while battling to save homes at the Camp Fire in Paradise, California, U.S. November 8, 2018. REUTERS/Stephen Lam/File Photo

MUNICH (Reuters) – Forest fires are becoming increasingly likely because of climate change and cost insurers more than ever, with the deadly fire that ravaged northern California the single most expensive natural disaster in 2018, Munich Re said on Tuesday.

The California wildfire that devastated the small town of Paradise in November caused losses of $16.5 billion, of which $12.5 billion were insured, according to the reinsurer’s annual catastrophe report.

Worldwide natural disasters caused $160 billion in economic damage in 2018. That was down from $350 billion the previous year, but a number of devastating hurricanes had contributed to the high losses in 2017.

Insurers and reinsurers paid out $80 billion for natural disaster claims last year, down from $140 billion a year earlier but almost double the 30-year average of $41 billion, the reinsurer said.

Munich Re board member Torsten Jeworrek said that 2018 was marked by several severe natural disasters with high insured losses.

“These include the unusual coincidence of severe cyclones in the U.S. and Japan, and devastating forest fires in California,” he said, adding that climate change appears to be making such large fires more common.

Insurers spent $18 billion on two huge fires in the United States in 2018 – equivalent to one in every four dollars they paid out as a result of natural disasters.

Ernst Rauch, the reinsurer’s chief climatologist, told Reuters that forest fires were entering a whole new dimension, costing tens of billions of dollars.

“Higher and higher temperatures are leading to ever greater droughts, and high humidity in the winter means that shrubbery grows quickly, creating an easily flammable material in dry summers,” he said.

Rauch said it was questionable whether areas at high risk could continue to be populated without taking additional measures, such as building houses further from forests and with better safety standards.

In Europe, an unusually hot summer caused a drought that wrought considerable damage on the agricultural sector and was the continent’s most expensive natural disaster at $3.9 billion. However, only a fraction of those losses were insured.

Reinsurers act as a financial backstop to insurance companies, paying a chunk of the big claims for storms or earthquakes in exchange for part of the policy premiums.

Hurricanes and typhoons caused $56 billion of damage last year. Hurricane Michael, which wrought devastation in Florida, was the most expensive for insurers, causing losses of $10 billion.

The review gave no claims figures for Munich Re itself. The reinsurer is due to report fourth-quarter results on Feb. 6.

(Reporting by Alexander Huebner; Writing by Caroline Copley; Editing by David Goodman)

As California fires blaze, homeowners fear losing insurance

Local residents react as numerous homes burn on a hillside during a wind driven wildfire in Ventura. REUTERS/Mike Blake

By Suzanne Barlyn

(Reuters) – California homeowners and regulators have a new fear about wildfires ravaging the state: that insurers will drop coverage.

Massive, out-of-season fires in northern and southern California are causing billions of dollars in claims and challenging expectations of when and where to expect blazes. State law gives insurers more leeway to drop coverage than to raise rates, and some are taking the opportunity, concerning California Insurance Commissioner Dave Jones.

Homes in the Sierra Nevada foothills were dropped after wildfires swept through the region in recent years, and some other Northern California homes also have been cut from rosters, Jones said.

“We may see more of it,” he added in an interview. Insurers must renew fire victims’ policies once, but after that homeowners could be driven to unusual, expensive policies.

Retired firefighter Dan Nichols of Oroville, California was surprised when Liberty Mutual dropped his coverage this year, following a wildfire in the region.

“I was shocked and angry,” said Nichols, 70, by email.

Liberty Mutual must “responsibly manage” its overall exposure to California’s wildfires as part of a strategy to safeguard its ability to pay homeowners’ claims, a spokesman said. The insurer still issues policies in California and its strategy is not in response to recent fires, he said.

Nichols found a better deal through AAA, but others are not as lucky. In San Andreas, a community northeast of San Francisco, homeowners typically use specialty insurers, known as “surplus lines carriers,” for policies that cost about 20 to 40 percent more than a mainstream insurer, said Fred Gerard, who owns an insurance agency in the area.

Insurers must be cautious by not covering too many homes in one area, said Janet Ruiz, a spokeswoman for the industry’s Insurance Information Institute. “They tend to spread their risk so they can pay claims,” Ruiz said.

COMPUTER MODELS

Drier weather and higher variability of weather patterns often seen as effects of climate change have led insurers to turn to new computer models that provide house-by-house predictions of risk, using factors such as local topography and brush cover, a change from past practices that were based on a region’s history of blazes.

“Relying solely on company history leaves many (insurers) exposed,” said Matt Nielsen, Senior Director, Global Governmental and Regulatory Affairs at modeler RMS. A new wave of models coming out next year will “revolutionize the way insurers understand and manage risk for wildfires,” he said.

“You can’t control mother nature, but you can identify her target zones,” wrote rival Verisk Analytics Inc in a brochure for its FireLine model.

Jones said the state was reviewing the new models, partly in light of drier weather conditions, more frequent, unpredictable and severe fires, and climate change.

A California poll by consumer advocacy group United Policyholders found that computer scoring was a reason for a significant number of policy cancellations in the last few years.

United Policyholders Executive Director Amy Bach said that the differences in scores generated by various models raised questions about their accuracy.

“We want to make sure it’s a fair system,” Bach said.

(Reporting by Suzanne Barlyn; Editing by Peter Henderson and James Dalgleish)

White House plans to seek another $45 billion in U.S. hurricane aid

White House plans to seek another $45 billion in U.S. hurricane aid

By David Shepardson

WASHINGTON (Reuters) – The White House plans to ask the U.S. Congress on Friday for about $45 billion in additional aid for disaster relief to cover damage from hurricanes that struck Puerto Rico, Texas and Florida and other disaster damage, a congressional aide said on late Thursday.

The request would be significantly short of what some government officials say is needed.

Puerto Rico Governor Ricardo Rossello on Monday requested $94.4 billion from Congress to rebuild the island’s infrastructure, housing, schools and hospitals devastated by Hurricane Maria. The state of Texas earlier this month submitted a request for $61 billion in federal aid.

Last month, Congress approved $36.5 billion in emergency relief for Puerto Rico and other areas hit by recent disasters and said it planned to seek another round of funding after it reviewed requests from federal agencies and state and U.S. commonwealth governments.

Puerto Rico sought $31.1 billion for housing, followed by $17.8 billion to rebuild and make more resilient the power grid.

Senator John Cornyn, a Texas Republican, said late Thursday at a congressional hearing his staff had been briefed on the White House that would be released on Friday that he called “wholly inadequate” but he did not disclose the precise amount.

He said the White House had also “short-changed” funding for wildfires that have struck the western United States. The October disaster assistance bill included $576.5 million for wildfire-fighting efforts.

The White House did not immediately respond to a request for comment late Thursday.

(Reporting by David Shepardson; Editing by Sandra Maler)

Business group pushes for U.S. flood insurance reform as December deadline looms

Business group pushes for U.S. flood insurance reform as December deadline looms

By Ginger Gibson

WASHINGTON (Reuters) – The latest attempt to overhaul the U.S. federal flood insurance program hit a stumbling block, but a coalition of business and environmental groups renewed their push on Wednesday for lawmakers to enact an overhaul before the program expires on Dec. 8.

The SmarterSafer coalition sent a letter to members of the U.S. House urging passage of the compromise legislation that would extend to 2022 the federal program that has been heavily utilized after vast flooding from hurricanes Harvey and Irma.

“This legislative package moves the flood program in the right direction and contains needed reforms that will better protect those in harm’s way, the environment, and taxpayers,” the letter states, according to a copy seen by Reuters.

The hurdle came with the House Rules Committee indefinitely postponed a hearing on the bill that was scheduled for Tuesday night.

“Clearly they’re trying to make sure they’ve got all their ducks in a row and they’ve got all the votes they need,” said Steve Ellis, with the conservative group Taxpayers for Common Sense, which is part of a coalition pushing for reform of the program.

Joshua Saks, the legislative director of the National Wildlife Federation, said one of the shortcomings of the compromise is that it does not ensure that the money for flood mitigation projects will ever be spent.

“We need an Apollo project of mitigation right now, we need billions right now up front,” Saks said, referring to the project that put a man on the moon.

Two prominent Republican members of the U.S. House announced last week they had struck a deal that would extend the life of the program that covers most of the nation’s flood-prone properties.

House Majority Whip Steve Scalise of Louisiana and House Financial Services Committee Chairman Jeb Hensarling of Texas brokered the compromise and said the deal helps policy holders and taxpayers.

Last month, President Donald Trump signed a $36.5 billion disaster relief bill, including $16 billion in forgiveness of some debt in the National Flood Insurance Program, which insures about 5 million homes and businesses.

(Reporting by Ginger Gibson. Additional reporting by David Shepardson.)