Insurance Companies Abandon Fire Areas in California

Richard Mellor

Afscme Local 444, retired

Forest fires caused $24 billion in insurance losses in California in 2017 and US insurers are pulling out of much of the market in response. By 2018 insurers refused to renew 167,570 home insurance policies according to the WSJ, over half of them in the low density rural areas.  I would be interested in why the other 80,000 or so. *

When this happens, people have few options. One of them is to go to what they call “surplus” carriers or to “reinsurers” these are companies that sell insurance to insurance companies. In either case, the costs are higher and often the benefits or coverage less. We have these huge deductibles that insurance companies impose on people whether it’s health care, car insurance, home insurance and so on. It is no wonder that millions of Americans hate the insurance industry with a passion. This is something trade union leaders could use as an organizing tool and also as part of a struggle for our own political party, an alternative to the twin parties of Wall Street, the Democrats and Republicans.

Private corporations whether it’s the sickness industrial complex and its hospitals, big pharma or the insurance companies, do not invest for social need or for the public good; they throw money in to circulation in order for it to return to them in greater quantities than their outlay. They invest to make profit. It’s not simply a response to demand or need as people need lots of things, We need social infrastructure for example and the social infrastructure in the US is in dire straits. Business Week once called it the third deficit. That was many years before the $1.6 trillion US student debt crisis.

As with all failings of the so-called free market of which there are too many to list here, the state, through the two capitalist parties, and California is a very strong Democratic Party state, ensures that the taxpayer steps in to save the day. Here in California, the zip codes hit by severe wildfires in 2015 and 2017 had insurers decline to insure 8,751homeowners in 2018, a 9.6% increase from 2017 and many homeowners in fire areas, people are relying on the state insurer, the California Fair Plan to step in.

More and more Americans are seeing that socialism isn’t so unpopular when the capitalist class falls back on it. The state, as Marx once pointed out, is the executive committee of the capitalist class as a whole, the defender of that class and the system it governs and that was certainly clear in 2008 when socialist measures were introduced to bail out the system, to drag it from the edge of the abyss. Huge swathes of industry were nationalized although the capitalist mass media refers to it a “conservatorship” they don’t want workers getting any ideas about nationalizing major industries.

There is more to this issue than simply fires and home insurance. Let’s not forget that the building of what is in actuality human shelter, the housing infrastructure of society is also a business and, has to make profit. How we provide housing, how we build, where and when is determined by market forces and the private sector.  We will also never see the end of these unnatural fires (leaving aside climate change for a moment) as long as society continues to encroach in to the rural areas, the mountains and our great forests. The devastation is considerable not just to plant life but also animals. Here is some video I shot when I drove up to Paradise California after the huge fire up there.  And here’s some drone footage.

It is the so-called free market that is at the root of what is a national and global environmental catastrophe. It is only a democratic socialist rationally planned economic system of production that can reverse this situation. The millions of workers who suffer the most from the brutal legacy of capitalist production can bring this about. To do that we have to recognize ourselves as a distinct class with distinct interests separate from those whose life and wealth is dependent on the exploitation and commodification of everything. The planet, we must argue, is not for sale. Just like Greenland.

* Home Insurers Retreat From Scorched Areas WSJ 8-21-19 p A3