California’s Pacific Gas & Electric (PG&E) managed to emerge from its very expensive bankruptcy. As most of you know, the bill for the claims for the homes, businesses and lives destroyed in fires caused by PG&E equipment hit $25.5 billion.
Like the rest of us, PG&E has to purchase insurance. And like the rest of us, when we’ve been delinquent with our property or not been exactly the best of citizens, we pay a higher premium. So when PG&E went to insure itself for the next year, the price tag quickly went out of sight.
PG&E Chief Financial Officer Jason Wells — in a second quarter investor meeting — said to get $1.4 billion in liability coverage for the next year, the company has to produce $750 million. Andy DeVries of the research company CreditSights said that’s a very high price to pay.
“That is a fancy way for saying nobody would sell them wildfire insurance,” he said.
The second quarter filing issued by the company said hopes consumers using its services will help pay those insurance costs. What Wells couldn’t tell investors was how. He said he can’t predict if PG&E will ever be able to purchase insurance at a reasonable cost or “will be able to obtain full recovery of its significantly increased insurance premiums.”
Wells did say that PG&E can get some help via the wildfire insurance fund established by the California Legislature. But those funds are only available if the company’s losses top $1 billion.
By the way, PG&E isn’t alone. Like PG&E, Southern California Edison’s power lines have been linked to destructive fires. So it had to shell out $450 million to get $1 billion in fire insurance to last through June of 2021.
Source link: Insurance Journal