Ag and Rural Caucus for November
November Schedule
Better Practices
6:30 pm Thursday 2 November
: Ann Mare Danimus, CD 5 Candidate
https://us02web.zoom.us/j/81582823697?pwd=V1FaVlV3Ly8xTHFBTTZZM1VxblVjQT09
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Reminder
[CD 3: Let’s hear from a winner]
[CD 4: Different strategy for Eastern v Central Washington?]
[CD 5: This is us!]
[CD 1,2,6,7,8,9,10: My, there a lot of you -need advice]
Better Practices
Ann Marie Danimus is running for Congress in CD 5.
Meet her.
Hear her ideas.
Give her advice.
Learn her election plan.
Talk policy.
Share campaign stories.
Carmela Conroy, Spokane County chair, is also running in CD 5. Meet Carmela in the new year.
Don
31 October 2023
Policy Briefing
6:30 pm Thursday 16 November
Climate Change, Insurance and Reinsurance
David Forte
Senior Property and Casualty Advisor
Insurance Commission
https://us02web.zoom.us/j/83419676203?pwd=NUo0NVVYOHU4Ky91RTYxa1Q0cjdXQT09
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Manage Risk? …Mitigate
Climate change is real, and the insurers are early to know just how expensive it can be to fix the damage. The problem is straight forward: Risk of property damage from natural catastrophe is increasing. And ultimately it is us who pays. The answer is not for the insurance commissioner somehow to make someone else pay or to make the climate-induced risk go away. One answer, though, is straight forward – mitigate the risk.
Mitigation may actually be one way to make the risk go away. Wildfire is an important climate-accelerated risk for us in Washington state. Lightning from an extreme weather event may spark ignition. Strong dry wind working on drought-stressed vegetation will speed a fire’s spread. These factors are not unique to climate change but climate change increases their coincidence and spikes their amplitude. Dave Forte, our presenter last Thursday, knows all this. He knows, too, that mitigation works to reduce the risk of fire to property. It is his business to know.
Severe wildfire certainly happens but the damage to homes, shops and barns depends on how well the owner is able to “harden” their property. This is familiar territory. A lot of us are familiar with Fire Wise programs from their local fire departments, county emergency services, conservation districts, or DNR. Usually what is offered is information.
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Fire Wise is public policy light. There is a community feel to it because the message is delivered at neighborhood meetings. Uptake is voluntary, though, and your success may depend on what your neighbor does. Dave was insistent that we need a community approach. He used that language.
We did talk about several “heavier” public policies. Paying contractors directly to harden property in exposed zones can increase program effectiveness. Building codes for the wildland-urban interface (WUI) could require building design and materials to resist ignition. Land-use planning changes could discourage WUI residences. Washington State this year did pass disaster resilience legislation (HB 1728) but handicapped it by housing it in Washington State Military Department, Emergency Management Division which lacks the tools and culture to work with individuals. There is that community approach again.
David did report to us on the specific question of whether Washington State property owners are being denied insurance. The short answer is “no”. We are not seeing the same problems as California.
In the event that Washington property owners are denied insurance the Insurance Commission can refer applicants to Washington Fair, a reinsurance plan financed by all licensed insurance companies in the state. Currently, WA Fair covers 130 properties and, of these, only a minority are the consequence of a natural disaster.
Let me know if you would like a link to the recording. There is much more to David’s presentation.
Don
20 November 2023
Reinsurance: Backstop drooping?
Reinsurance is what makes the (insurance) world go around. Primary insurance writers go to re-insurers to hedge the risks that keep them up at night. And what might that be? Well, climate change. Climate change pushes up the amplitude of natural catastrophes, moves them around to unsuspecting regions, and simply makes more of them. Nat CAT (natural catastrophes) translate rather directly into losses for home owners, businesses, and farmers who turn to their insurance agents to make them whole, or mostly so, after a flood, fire, wind.
The fickleness and power of climate-induced natural catastrophes throws a curve at risk modeling and the hedging of those risks. The whole system works pretty smoothly when risks are predictable: property owners pay premiums, primary insurers off-loan a portion of their liability to reinsurers just in case, and reinsurers go to the financial markets to invest their share and get extra cash when needed.
Natural catastrophes stress the system and nothing stresses like wildfires east and west of the Cascades or summer flooding in Nova Scotia or sudden hurricanes in Acapulco. The smooth system of premiums paid and risk shared is shaken. It is too much. Losses exceed the pile of money stocked up to cover. The system responds by increasing the price of sharing risk and, in some cases, backing out of issuing insurance at all.
What can we do to insure against Nat CAT risk? The underlying problem is that our property losses exceed our ability to pay. What role do we want for our elected governments and just what can they do to make risk go away? Or at least make hedging our risk affordable?
Don
8 November
Uncertain about Climate Change? Ask your Insurance Agent
Last evening, I asked our guest, Ann Marie Danimus, about how to persuade a climate skeptic that climate change is real. She said, “Ask a farmer.” She added, “and ask your insurance agent” (or words to that effect). The point is that our economy is adjusting to the risks of floods and drought, wind and fire. Professional managers are hedging their bets faster – and more air-tight – than most of us. And insurance companies are densely populated with professional managers. That leaves the rest of us playing catch up.
Where are we now? Are we in rural Washington finding it more difficult to insure our homes, shops and farms? Are our premiums simply higher to reflect the increased risk of wildfire, or rising sea levels? How does our economy work to hedge the enormous risks of a disruptive climate? Is there anything we can do?
Questions. We may not have the answers but the Insurance Commission can give us information and context.
Don
3 November 2023
Climate Change, Insurance and Reinsurance
It is reported that Allstate and State Farm have stopped writing new insurance policies in California. Climate change – and insurance losses – are the culprits. Wildfires and floods are causing major losses of property.
November’s policy briefing informs us on an emerging issue. We will look at the incidence of property insurance pull back in Washington. Is it currently a fact or just a fear? Either way, climate change poses serious challenges to the viability of the insurance and reinsurance industry. You may at first yawn at the prospect of a profit squeeze on the insurance industry. Remind yourself, though, about how your bank manages its risk by requiring you to provide proof of property insurance to back up your mortgage.
Our economy works on allocating risk, and typically risk allocation replicates the distribution of political power. The vulnerable ultimately bear more than their share of risk, whether paid in dollars or not.
In the State of Washington, the vulnerable have a champion, The Insurance Commission. Staff from the Insurance Commission will help us understand how climate change feeds pretty much directly through to private homeowners and our ability to manage our own risk. Along the way, they will assess what role the state can play in helping us buffer the financial consequences of fires and floods in our neighborhoods.
So, our goals are to get a report on whether insurance denial is happening in Washington and, if not now, when. We will learn about insurance and reinsurance and why climate change (heat, rain, fire, flood) is challenging these fundaments of our economy. And we will learn to what extent state policy (Insurance Commission, Legislature) can buffer the financial burden of climate change for rural home and business owners.
Happy Halloween.
Don
31 October 2023
Our Better Practices roundtable is on the first Thursday of each month at 6:30 pm.. Use the link above for 2023.
Our Policy Series is on the third Thursday of each month at 6:30 pm. Use the link above for 2023.
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Our mailing address is: Ag and Rural Caucus 2921 Mud Creek Rd Waitsburg, WA 99361