Insurers across the country are leaving high-risk areas that are affected by disasters like wildfires. Some Oregonians are experiencing insurance rate increases and are struggling with a shifting insurance market. In Deschutes County, homeowners in fire-prone areas are facing higher insurance premiums, according to The Source Weekly.
And residents in Southern Oregon are seeing similar issues. Earlier this month, Sen. Jeff Golden, D-Ashland, held a town hall in Medford. He spoke with frustrated residents who were concerned about the state’s final wildfire hazard map, according to KOBI-TV NBC5 News. Oregon law prohibits insurers from using the map to adjust rates. Mitigating risks through fire-wise communities and creating defensible space are some of the ways residents can show insurers they are taking action.
We hear more about these concerns from Golden and Andrew Stolfi, the state’s insurance commissioner and the director of the Oregon Department of Consumer and Business services.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. We start today with a deep dive into homeowners insurance in this age of increasingly expensive fires, floods and other catastrophes. Insurance rates are skyrocketing across the country and in Oregon. In the most high risk areas, some residents are struggling to find insurance at all. In a few minutes, we’ll talk with one of the state lawmakers who’s been most focused on wildfire preparedness, including insurance companies. But for the big picture, we start with Andrew Stolfi. He is the state’s insurance commissioner and the director of the Oregon Department of Consumer and Business Services. It’s good to have you on Think Out Loud.
Andrew Stolfi: Thank you for having me.
Miller: Can you give us a sense for just how big the increase in homeowners insurance premiums has been in recent years?
Stolfi: Glad to. I think it’s important to start with a little bit of context as well first. There’s actually three different types of insurance markets that we’re talking about. There’s the standard insurance market and those are the companies that you see commercials for on TV that most people have their home insurance from. Then there’s something called the FAIR Plan; that’s an insurer of last resort. That is set up by the state and is there in case someone cannot find insurance through the standard market. And then there’s this other kind of market called the surplus lines, which you don’t have to worry about.
I’ll say, in all of these markets, and in places around the state and around the country, everyone has been seeing, probably at least double digit insurance premium increases – that’s auto [and] home policies especially. There’s a couple of reasons driving that that are consistent across the board, even before we start talking about natural disasters and wildfires specifically.
Miller: Well, so let’s do that. Let’s cut away wildfires, floods, natural disasters like that. What are the factors that are leading to the rise separate from those?
Stolfi: Natural disasters in general, and just disasters in general … We can come back to wildfire specifically, but there have been an unprecedented number of billion dollar disasters across our country. Last year was the 10th year in a row that we’ve had more than 10. The last two years, we’ve seen more than 30 or almost $30 billion disasters a year.
Why that really matters is for something called reinsurance. So reinsurance is insurance for insurance companies. Every single company has it. They need it to operate. They need it to do the business that they’re doing, and what it does is shield them from significant losses. Because of the really significant billion dollar disasters that have been happening all over the country, and actually all over the world, reinsurance companies have been losing unprecedented amounts of money. And reinsurance costs for insurance companies have been going up exponentially. We’ve heard that it costs twice as much to get about half as much of the reinsurance coverage. And these are just operating costs for insurance companies that ultimately do get passed on and result in premiums going up.
The other really big factor affecting everyone across the country and across our state is inflation. So it’s well known, the significant inflationary costs that we’ve been seeing. What that does, especially when you’re seeing at the same time the significant increase in losses and in damage, those losses are much more expensive. So even just a small kitchen fire costs significantly more to repair or replace than it did before we were seeing these inflationary pressures.
Miller: Well, can you give us a sense for the numerical scale of the catastrophic losses that insurance companies have to deal with in recent years compared to previous decades?
Stolfi: Absolutely. So we can talk about Oregon here, specifically. This is really important, I’ll say, because insurers’ decision making is guided by two main factors. So when a company is trying to decide whether to offer a policy, whether to renew a policy and how much to charge – I’m simplifying it a little bit – they’re looking at the likelihood of someone filing a claim and then how much that claim is going to cost them. In order to do that, they look at experience and then they make projections. They have very sophisticated models to then make projections into the future.
What we’ve seen here in Oregon over the last 40 years is pretty shocking. If we look decade by decade, we start in the ‘80s, ‘90s, 2000s, 2010s, we’ve seen well below a half billion dollars in insured losses, maybe even only $200 million each decade. And that’s for wildfires, winter storms, floods, windstorms, etc. So that all changed pretty dramatically this decade. We’re only a few years into it and we’ve already seen nearly $3 billion in wildfire insured losses, about $1 billion in winter storm losses and $200 million in wind losses. That’s more than $4 billion in insured losses in the first few years of this decade. That’s more than four times the last 40 years combined.
Miller: OK, so a huge increase in the money that insurance companies have to pay out. But how do you know, as Oregon’s insurance commissioner, if the premium increases that Oregonians have to pay [are] reasonable?
Stolfi: Well, that’s at the core of what we do. And to make a little distinction between some of the states – in Oregon, as a regulator, insurance companies don’t have to get our approval to make a rate increase. California, for example, is a little different. Before an insurance company can increase a homeowner’s premium, they have to get approval from the regulator.
Miller: Because that’s in state statute in other states including California, and not in Oregon statute?
Stolfi: That’s correct. Our pre-approval authority is limited to health insurance and long-term care insurance premium changes. But that doesn’t mean we don’t have information and look at what they’re doing. So companies are still required to file with us their underwriting and rating plans, so that they have to let us know all of the factors that they use in making their decisions, including their rating decisions. And we have a team of actuaries and other professionals that spend their time combing through those to make sure that they are not unfair or unfairly discriminatory and that the prices that they’re charging are actuarially sound – meaning that they have data, they have evidence, they have proof for the changes that they’re going to make. And if we see something that they do not have proof for, if they don’t have actuarial data to support, we do have the authority to tell them to make a change.
Miller: Do you have a sense for how many Oregonians don’t have access to homeowners insurance from the private market that they can actually afford?
Stolfi: Unfortunately not. That’s one gap in our data kind of difficult to fill, but there are a couple things that we do know. We do have a very competitive insurance market. We’ve got over 100 insurance companies that are offering homeowners policies. And what we’ve seen over the last five years is no companies leaving our market because of wildfire risk across the state. So it’s very good news.
Miller: And that’s different from other states, where some companies have just said, “we’re not going to underwrite.”
Stolfi: Yes, absolutely. I’m sure you’ve seen, and others have seen, the news out of California, for example … very unfortunate. But there have been companies, very large companies, too, that have said, “we are leaving the state altogether” or more likely that they’re gonna stop writing new business. Or, also what we saw around the LA area is insurance companies saying, “We’re no longer gonna write any business. We’re not gonna even renew the business we have in those specific areas.”
Miller: Is there any reason to believe that, as in a lot of ways, California is just ahead of other parts of the U.S. or other parts of the West, and that is Oregon’s future?
Stolfi: They’re ahead in ways that they’re seeing this spike. I talked about this spike we saw a little bit this decade. They first started seeing that from a wildfire loss perspective last decade. But I think there’s still some really significant differences between our states, both practical differences as well as regulatory differences, which do not lead me to believe that we’re going down the same path as in California. There’s obvious population differences. I’m not a land use and zoning expert, but Oregon does have some pretty stringent urban growth boundary limitations that you don’t see in California. Paradise, California has a whole number of them. We don’t see quite the same population growth and population density within the WUI, which is really important.
If you look at the 10 year averages for acres burned and structures lost, we’re somewhat comparable. We’re averaging about 700,000 acres a year burned. There are about 1.2 million. From an insurance perspective, that matters, but what’s more important are structures lost because structures lost result in claims and that’s what changes insurers’ behavior. And over the last 10 years California has seen 56,000 structures lost. That’s about 4,000 or so a year. We have seen about 4,000 total. Of those, about 90% were in 2020. So one wildfire event and it gets up to 95% of all of our structures lost within two years in 2020 and 21.
So real outliers for us. Last year, 2024, we lost a lot of acres to wildfire, but only about 40 residences. And that’s the kind of trend that we’re gonna want to see continue if we’re not going to become more like the California marketplace.
Miller: Hopefully, one of the big pressures on the increase in premiums is going away, in terms of escalating prices and inflation. Who knows, but right now that’s largely under control. But climate change is fueling an increase in the intensity and likelihood of fires. That’s sadly, seemingly only going to get worse. As humans, we’ve not done a good job of reining in fossil fuel emissions and it seems like we’re maybe going to get even worse in that respect in the coming years.
So in the insurance world, what are you looking for right now in the future in Oregon?
Stolfi: Well, what we’re looking for is the continued and increased investment that the state’s been making in pursuing the cohesive wildfire, wildland management strategy. So three main parts [are] restoring and maintaining resilient landscapes. So reducing risk across the landscape, so that fires do not become these devastating events.
The second is creating more fire adapted communities. And here’s where there is a lot of ability for property owners to to influence decisions, in addition to what the state’s doing through implementing defensible space measures – clearing mulch from around your house, not having a wooden fence go right up against your house, trimming some trees near your house, as well as home hardening measures. So having a class A roof instead of a cedar shingle roof. There’s also community level events, so communities can band together, neighborhoods can work together to reduce risk in their neighborhood. There’s a great program you can join, a Firewise community, where a community comes together and there’s help, assistance and planning in order to inventory and address the risks in their neighborhood.
Of course, the third part of the strategy is safe and effective wildland wildfire response. So the state continues to make the investments that it’s making, to suppress fires before they become devastated.
Miller: Andrew Stolfi, thanks very much.
Stolfi: Thank you, Dave.
Miller: Andrew Stolfi is the director of the Oregon Department of Consumer and Business Services. He’s also Oregon’s insurance commissioner.
We did get a comment on Facebook apropos of what Andrew Stolfi just mentioned. Alan M. Thornton wrote this: “A resource worth passing on to folks to maybe get some help. There have been grants offered as well for several areas to enact Firewise measures. I worked on the 242 Fire in 2019, and saw firsthand a number of homes that we could defend easily because they took advantage of the Firewise program. I gratefully met the family of one home we saved, and she showed us her photo album of before and after she did the measures. She was so, so proud, despite the trauma of the area being raised and other friends losing their homes.”
I’m joined now by Democratic State Senator Jeff Golden, who represents most of Jackson County in Southwestern Oregon, including the cities of Phoenix and Talent. Senator Golden, welcome to the show.
Jeff Golden: Glad to be here, Dave. Really appreciate the show.
Miller: Can you remind us what the idea was behind Senate Bill 762? You were one of the big champions of that bill in the Senate now four years ago.
Golden: Yeah, right. Thank you for that because I really want to set some context. That was a historic omnibus bill passed in 2021 bipartisan basis that built on, I’m gonna say 10 or 15 years of national research, consultation and deliberation, especially a group that Governor Brown convened in 2019. For best practices to do three things … and Commissioner Stolfi just kind of mentioned them. One is forest resiliency, fuel reduction, that kind of thing. One is good fire suppression, detection, pre-positioning. And the third that most people know about and focus about fire adapted communities, that’s the defensible space and hardening.
So it’s a long bill with a lot on utilities and what they have to do – because they’ve become an important player here – on smoke mitigation and smoke programs for folks experiencing sustained smoke. Very comprehensive. And we took a couple of years deliberating and passing it. Because of the nature and the scale of the threat we have, you just talked about the future trends that are troubling, and it’s going to take strong, tenacious, and I’m afraid expensive measures to get our state through the next few years in one piece.
Miller: One of the elements of that bill that’s now law is the wildfire risk maps that we’ve talked about a fair amount in the show over the years but not super recently. And now those maps have become finalized. There’s been a lot of pushback, public backlash to aspects of these maps, including at a recent town hall that you hosted in Medford. Can you give us a sense for what you heard there and what you’ve been hearing, I imagine now for years?
Golden: Yes, I have a lot of really concerned constituents. Most of the high hazard properties are in Jackson, Josephine County, followed by Deschutes County. And the mapping is really hard for people to understand on the ground. You know, there’s a mix of people upset. Some think government has no right to instruct them at all on what they do on their property, but I don’t think that’s the majority. For the majority, it is the difficulty of seeing why their property, when you walk the property and look at it, should be designated high hazard. And I’ve walked a lot of properties with property owners at their invitation, and that is a real problem.
That is [what] we’re going to address this session, because this only works … this whole program, it’s way beyond government’s ability to solve this wildfire crisis. If we don’t work together, civic organizations, people, communities, government, we’re going to lose. And what that requires is not the buy-in of every Oregonian necessarily, but a certain base level of common sense for people who need to participate. And the maps have a problem in that the hazard categories are determined only by landscape, inputs, vegetation, climate, weather and topography. And what that means is that what you do on your particular property and its specific characteristics aren’t part of the designation calculation. People find that super hard to understand. Frankly, I don’t blame them. It needs to be in that formula somewhere to make enough sense for people to want to be part of the solution.
Miller: How would that work in practice? How would the cartographers or the experts who are doing this have that kind of granular detail on a regular basis, if every year, some number of Oregonians create a little bit more defensible space or change their roof? Logistically, how could that actually make its way onto a state map? It seems like an extraordinary amount of data that could only be collected house by house.
Golden: We are having a lot of conversations about that. You point out a very big challenge. And that is why, along with others, I’m trying to shift in the direction Commissioner Stolfi was talking about. You know, this was seen by some people, some rural people, as sort of a heavy-handed top-down regulation bill. And it really wasn’t that. That’s not what we want. So what we have realized, it’s kind of obvious, is the insurance industry has a much better incentive system – sticks and carrots, if you will – than government can impose trying to regulate in rural Oregon, and losing the acceptance and willingness of people to collaborate … and the kind of the mechanics that you’re talking about.
So very quickly, one bill that I’ve had a couple sessions that I’m bringing back, would have the state fire marshal create a statewide network of neighborhood protective cooperatives with a standardized program for risk assessors, experts to walk properties – this is all voluntary – and give people kind of a punch list of tasks that they need to do to get certified as a neighborhood. If the neighbors do that, and there’s great evidence that neighbors are working together well to do this, they do get a certification that we are negotiating with the insurance industry to factor into their premium setting decisions ...
Miller: Am I right? So this was Senate Bill 1511 in the last session that died in the Ways and Means Committee.
Golden: Right. The same thing passed my Natural Resource Committee this session before as well and died there … bringing it back a third time and trying to build support. I’m really …
Miller: Why do you think it hasn’t had widespread support before?
Golden: Well, it’s had widespread policy support, and then goes down to Ways and Means with 1,000 other things, and doesn’t get the attention it needs. You have me on another day to talk about the legislative system. [Laughter] We’ve arrived at a major challenge associated with all this, which is funding our programs. We have walked back dramatically from our funding levels in Senate Bill 762. I’ve been part of a large working group the last few months to bring the legislature funding proposals. But we need to be really clear with people: We are in an age, because of wildfire and some other things, that is going to be more expensive, more inconvenient and have us doing things we’d just as soon not do, relative to five, 10, 20 years ago. It’s a new day.
Miller: But let’s say that the idea you just mentioned does get enough momentum and passes the legislature. And neighborhoods get together to cooperatively and proactively reduce wildfire risk. Does the state have the authority to force insurance companies to factor that communal wildfire mitigation work into their premium calculations? Because as we heard from Andrew Stolfi, they don’t have the ability really to say, unlike for health insurance, yes, we’re gonna review the underwriting numbers and we’ll say whether or not we think it’s fair.
Golden: So the short answer to your question is no, we don’t. And this is a very robust conversation between the industry and states all around the country [that] are getting hammered by climate chaos. One thing to note is we don’t restrict the way California does, but what that means is insurers can leave. Insurers can say to any state who does that, “Yeah, too bad, but we’re gonna lose money staying under your caps given all the circumstances. Goodbye.” So that’s the other side of that. But we are going to be debating this very thing in the legislature.
Miller: Let me make sure I understand the point you’re making because it’s an important one. What I hear in that is yes, insurance companies may leave California, may choose to either stop underwriting completely or stop giving new policies. But because Oregon is more lenient in its regulations, companies are less likely to do that. We may see higher and higher premiums, but the companies at least are doing business here. Is that accurate?
Golden: It’s pretty basic economics. Big companies have not left Oregon, like Allstate and State Farm in California, although they went back after negotiating. But we are seeing unaffordable premium increases. They’re saying you want me to insure your place that we think is hazardous. Here’s what it’s going to cost, and it’s just beyond what many people can afford.
Miller: Practically speaking, is there a difference between unaffordable homeowners insurance and no home homeowner’s insurance?
Golden: No. Not the way I see it. If you can’t have it, you can’t have it.
Miller: The other side of this is – which I feel like people talked about a lot nationally after Hurricane Katrina and and other major natural disasters, but I hear about less – in this case, the market as opposed to government saying, “Yeah, you can’t rebuild here” or “you shouldn’t build in this new place.” Do you believe there are places in Oregon where homes should not be built?
Golden: You know, I do. And then I think about my neighbors, people I’ve known for 50 years, who have everything invested in their homestead and where they are. The process of telling them, guess what, that doesn’t have value anymore and you can’t rebuild, it’s a crucially difficult sociological problem. But, if you just took it on sort of probabilities and rationality, do we want to keep building in areas where there are floodplains, hurricane alleys or wildfire zones, that odds say are going to get destroyed again soon? It’s a really tough dilemma.
Miller: Do you feel better if it’s a corporation telling people “we’re not going to insure you there,” than the government saying “you simply cannot build there.”
Golden: Boy, can I get back to you on that? I don’t like either … is there a number three?
Miller: I don’t make the climate change rules in the world we’re living in right now. I don’t know if there is a number three.
Golden: Well, right now, insurance companies are doing that. I don’t think we’re close to the political will to tell Oregonians that right now.
Miller: Jeff Golden, let’s talk again.
Golden: Thanks. Appreciate it, Dave.
Miller: That’s Jeff Golden, Democratic state senator who represents most of the Rogue Valley, including the cities of Talent and Phoenix, also Medford, Ashland and others.
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