As you know, Pacific Gas & Electric is being blamed for many of the wildfires in California that have killed dozens of people and destroyed massive amounts of property. Since 2017 close to 1,000 lawsuits have been filed against the company.
More suits are likely.
To date the company has been blamed for 17 major fires and the cost to PG&E — if found guilty — is around $30 billion. No cause has yet been determined for the Camp Fire that burned down most of Paradise, California and killed 86 people. However, most experts say it’s likely PG&E caused.
That said, PG&E was recently found to not be the cause of the fire in Napa’s wine country that killed 22 people and destroyed over 5,000 homes and businesses. Good news for PG&E. Not such good news for those who lost so much.
That conclusion by CalFire will — no doubt — be attacked in court.
Adding to the complexity of the lawsuits and lawsuits to come is PG&E’s filing for bankruptcy. However, PG&E’s interim CEO John Simon said the company isn’t trying to ditch its responsibility. Bankruptcy will let the company make an orderly, fair and expeditious resolution of wildfire claims.
“Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires,” he said.
Among those seeking restitution from PG&E are insurers who’ve shelled out dollars to make victims of those fires whole. One of the companies suing the company is State Farm. Its suit said PG&E failed to “keep the power lines, wires, and any and all associated equipment in a safe condition at all times to prevent fires.”
California Insurance Commissioner Ricardo Lara said to date insurers have received $14.8 billion in claims for the Camp Fire and other fires in California in November of last year. That — he says — is a massive financial exposure. However, he is confident insurers can handle the claims but isn’t sure if those losses can be passed on to PG&E.
“The outcome is still undecided on who is responsible for that fire, but we know insurers have the money they need to make the claims whole,” Lara said. “Regardless of who’s at fault, we are confident insurers have the money.”
Another concern Lara has is the ability of people in fire-prone areas to purchase insurance, or keep the insurance they purchase. He said insurers must — if they choose not to insure — tell the insured that there are other options like the state’s insurer of last resort, the FAIR plan.
“We want to make sure that we’re monitoring the situation, and right now we don’t feel this is an area we should be alarmed about,” Lara added.
While some worry, the American Property Casualty Insurance Association (APCI) is not. Its members write 60% of the P&C insurance written in the U.S. Spokeswoman Nicole Mahrt-Ganley said, “California still has a competitive market, there are other carriers moving into place to write new business.”
A.M. Best said insurers are definitely going to take a hit and will have substantial losses because of the PG&E bankruptcy. Some specialty insurers will take the biggest hit but Best said, “the losses will be within their risk appetites, and we do not expect any ratings impact.”
Source links: Press Democrat, Insurance Business America, Carrier Management