We start our updated look at California’s wildfire crisis with Pacific Gas & Electric and the Camp Fire. It killed 86 people, destroyed 90% of Paradise, California and left most of its 27,000 residents homeless.
In the last few days California Attorney General Xavier Becerra threw out the idea of charging PG&E with murder or — at the very least — manslaughter. Those charges are being considered but few doubt Becerra will follow through.
Meanwhile, three major insurance companies — Allstate, State Farm and USAA — have filed a lawsuit over billions in estimated claims from the fire that destroyed Paradise. PG&E has admitted problems with a high voltage tower near where the fire began. Investigators — however — emphasize that no official cause has been determined.
At the present time, insurers are on the hook for most of the damages. Allstate issued a statement and said, “Plaintiffs have suffered damages caused by an act or omission of defendants.”
In its statement on the suit, State Farm accuses the company of “failing to keep the power lines, wires, and any and all associated equipment in a safe condition at all times to prevent fires.”
If the insurers prevail, it could end up being a huge loss to already stressed PG&E.
The insurance lawsuit and billions in losses from the Camp Fire and others aside, PG&E has other problems. California’s Public Utilities Commission (PUC) is considering a breakup of the company — or at least making drastic changes to it. Those changes would include:
• The replacement of all or some of the board of directors and the company’s management
• New conditions for equity return that are based on safety
• The reorganization of PG&E into regional subsidiaries
• Making PG&E a public utility
PUC Commission President Michael Picker said comments will be taken on those proposals — and others — until the end of January. He added, “We must be careful and practical. This process will be like repairing a jetliner while it’s in flight. Crashing a plane to make it safer isn’t good for the passengers.”
PG&E isn’t liking what it’s hearing but issued a statement saying it is open to change. “We’re open to a range of solutions that will help make the energy system safer for the customers we serve. PG&E’s most important responsibility must always be public and employee safety,” PG&E said.
A lot of claims from the Camp Fire are being filed. California Insurance Commissioner Dave Jones has asked insurers to pay 75% to 100% of the content coverage limits without the requirement of providing a detailed home inventory.
“Many insurers have stepped up to do the right thing for policyholders by agreeing to my requests and eliminating more red tape from the claim process,” Jones said. “Requiring fire survivors who lost everything to fill out a burdensome detailed inventory of every possession that they have collected for decades is simply asking too much, which is why I asked insurers to waive this requirement and pay at least 75 percent of the coverage for contents without requiring the inventory.”
The fires are having an impact on insurance company ratings from A.M. Best and Fitch Ratings.
A.M. Best has placed some companies on negative notice and Fitch says the losses will have some — but not a huge — impact on ratings.
Source links: Sacramento Bee, California Department of Insurance, Insurance Journal — link 1, link 2