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insurance industry
Holy Scandal-rooski! What You Won't Learn From State Farm's NFL Playoff Ads
The insurance giant—one of the nation's largest—does some bundling that hasn’t gotten the media attention it deserves, especially given the climate devastation in Los Angeles that the whole country has been watching on TV.
Jan 11, 2025
With NFL playoffs about to begin, State Farm Insurance will be constantly running commercials in which multimillionaire Kansas City Chiefs coach Andy Reid and his multimillionaire star player Patrick Mahomes belittle themselves by using their fame to personally cash in instead of using it like, say, Colin Kaepernick did, to address an issue of social significance. True to form, the NFL blackballed Kaepernick but at least he maintained his dignity.
In one commercial Reid acts goofy as he repeatedly says “Bundle-rooski” to describe Star Farm’s plan for bundling home and auto insurance. State Farm does some other bundling that hasn’t gotten the media attention it deserves, especially given the devastation in Los Angeles that the whole country has been watching on TV.
This other bundling couples State Farm’s refusal to insure tens of thousands of homes in fire prone areas with State Farm’s doubling down on investing in the fossil fuel industry. Not insuring properties that seem guaranteed to cost the company lots of money seems like good business sense. But it becomes shameful if coupled with also propping up the fossil fuel industry.
The Los Angeles Rams are hosting an NFL playoff game this weekend but because of the fossil fuel driven wildfires the game has been moved from LA to Arizona and, of all places, State Farm Stadium.
The fires in LA are called natural disasters but that’s not an apt description by itself. We are all witnessing the increasing number and magnitude of droughts, floods, heatwaves and storms that climate scientists have been warning us about for decades. Much of the discussion now is about how we need to adapt to the new climate reality, which is true. But the first rule for getting out of a hole is to stop digging and the definition of insanity is to keep doing the same thing over and over and expect different results.
We need to quickly and greatly cut back on our burning of fossil fuels. State Farm needs to stop investing in fossil fuels before much more of the country becomes uninsurable.
The country said goodbye this week to Jimmy Carter, a most decent man who tried to set us on a path to renewable energy almost 50 years ago. Now we’re about to reinstall his direct opposite. We must resist. We must stand with each other and for the common good.
The Los Angeles Rams are hosting an NFL playoff game this weekend but because of the fossil fuel driven wildfires the game has been moved from LA to Arizona and, of all places, State Farm Stadium. If you watch be on the lookout for the “Bundlerooski” commercials, then spare a thought for Colin Kaepernick, Jimmy Carter, all the uninsured people in LA who lost everything…and State Farm’s scandalrooski.
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Total Devastation as LA Suffers What Could Be 'Costliest Wildfire Disaster in American History'
One estimate put the damage and economic losses from the fires—which are still burning—at $135-150 billion.
Jan 10, 2025
"Will this be the event that finally wakes everyone up?" wondered climate scientist Peter Kalmus on Thursday, with Los Angeles in its third day of multiple fires consuming large swaths in and around the city, forcing residents to flee and leaving destruction in their wake.
Late Thursday, the Los Angeles Times, citing officials, reported that at least 10 people have been killed by the blazes and upward of 9,000 homes, businesses, and other buildings appear to have been destroyed or damages in the two largest fires, the Palisades and Eaton fires.
The fires, now in their fourth day and still largely not contained, could be "at least collectively, the costliest wildfire disaster in American history," Daniel Swain, a climate scientist at the University of California, Los Angeles told the LA Times.
AccuWeather, a weather data and news company, on Thursday estimated damage and economic losses from the fires at $135-150 billion. A JPMorgan analyst, Jimmy Bhullar, gave a smaller figure to The Wall Street Journal on Thursday. He said that losses from the fires are pegged "close to $50 billion."
AccuWeather chief meterologist Jonathan Porter said that "fast-moving, wind-driven infernos" have spawned "one of the costliest wildfire disasters in modern U.S. history."
"To put this into perspective, the total damage and economic loss from this wildfire disaster could reach nearly 4% of the annual GDP of the state of California," Porter said.
For comparison, Hurricane Katrina, which devastated parts of the American South including New Orleans in 2005, cost $101 billion in 2023 dollars, according to the Insurance Information Institute, citing numbers from the insurance company Aon (other sources have put the cost of Hurricane Katrina at higher).
All told, the California Department of Forestry and Fire Protection counts five "currently active incidents" of fires burning in Los Angeles County. The Palisades Fire, which has so far burned over 20,000 acres, is 8% contained, and the Eaton Fire, which has burned more than 13,000 acres, is 3% contained. The Kenneth Fire, which has grown to 1,000 acres, is 35% contained. Two smaller fires, the Hurst Fire and the Lidia Fire, are 37% and 75% contained, respectively.
One homeowner in the Pacific Palisades remarked that his neighborhood "looks like Berlin—or it looks like some part of World War II...Everything is burned down. It’s just terrible."
The fire are also expected to deepen California's insurance crisis. San Francisco Chroniclereporting from last summer on data from 10 of the largest insurance companies revealed that more than 100,000 Californians lost their home insurance between 2019 and 2024. Insurance companies "overwhelmingly cited" wildfire risk as the reason for rolling back coverage.
California Insurance Commissioner Ricardo Lara on Thursday issued a one-year moratorium on homeowners insurance nonrenewals and cancellations for ZIP codes impacted by the fires.
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Amid LA Inferno, Home Insurers Under Fire for Policy Cancellations
One observer said it "really feels like the climate crisis is putting the home insurance industry on a fast track to being almost as reviled as the health insurance industry."
Jan 08, 2025
As deadly wildfire incinerated more than 1,000 homes and other structures in Los Angeles County this week, insurance companies are sparking outrage for having recently canceled homeowners' policies across California—including in some of the areas hit hardest by the current blazes.
More than 1,000 homes, businesses, and other buildings have burned in the Palisades, Hurst, and Eaton fires—the latter of which has killed two people, The Los Angeles Times reported Wednesday. Fueled by fierce Santa Ana winds and extraordinarily dry conditions, all three fires were at 0% containment as of Wednesday afternoon, according to the California Department of Forestry and Fire Protection (CAL FIRE).
Authorities have issued mandatory evacuation orders for more than 80,000 residents. Los Angeles County Fire Chief Anthony Marrone told reporters Wednesday morning that a "high number of people who didn't evacuate" suffered serious injuries. Hundreds of thousands of area residents are also without power.
CAL FIRE said on Wednesday afternoon that the largest of the three blazes, the Palisades Fire, had burned more than 11,000 acres, while the Eaton Fire had scorched over 10,600 acres and the Hurst Fire topped 500 acres burned. Firefighters battling the Palisades Fire reported hydrants coming up dry.
Amid increased extreme weather events driven by the climate emergency, insurance companies have faced criticism for canceling policies and pulling out of states with elevated wildfire or hurricane risk.
State Farm, one of California's largest insurers, announced last year that it would not renew 30,000 home insurance policies throughout the state—including at least hundreds in areas affected by the current wildfires—explaining that the move was meant to avert a "financial failure" that would "detrimentally impact the entire market."
Other insurance companies have taken similar action, leaving their customers scrambling to find coverage.
Michael DeLong, research and advocacy associate at the Consumer Federation of America, told Common Dreams Wednesday that while climate-driven extreme weather has "made many areas riskier to insure," insurance companies are also canceling policies because "they're trying to take advantage of the situation of rising risks and rising costs to weaken consumer protections."
"They've been waging a campaign against Proposition 103… a ballot initiative that got passed in the late 1980s that, among other things, puts in place a lot of consumer protections about insurance," he added. "This has been a big deal for consumers and it's helped keep rates down. But insurance companies really hate these consumer protections and have been trying to weaken them."
In a Wednesday interview with Common Dreams, Jamie Court, president of the Los Angeles-based group Consumer Watchdog, noted that "under Prop 103, we could challenge rate hikes, and we saved $1 billion by challenging rate hikes that were too high last year."
However, advocates say that California Insurance Commissioner Ricardo Lara's new "sustainable insurance strategy" will make it harder to challenge rates and lacks transparency and public input.
DeLong said Lara is "allowing the net cost of reinsurance to be passed on to consumers."
Insurance Commissioner Ricardo Lara Reinsurance Regulation To Pump Up Homeowners Rates By 40% Without Guarantees of New Wildfire Coverage! With No Opportunity For Public Input! Read: consumerwatchdog.org/insurance/la... #insurance #InsuranceClaims #california
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— Consumer Watchdog (@consumerwatchdog.bsky.social) January 4, 2025 at 10:49 AM
Reinsurance is an arrangement in which insurance companies transfer risk to another insurer to mitigate damages.
"Until a few weeks ago, California's regulations didn't allow the cost of reinsurance to be passed on to consumers, and now they do," DeLong explained. "So that's probably going to drive up costs for consumers. The commissioner and the department say it's going to make the insurance industry more stable—we're kind of skeptical of that."
"Another reform that he's done is allowing the use of catastrophe models in insurance," DeLong added, referring to a risk management tool that helps insurers assess potential financial impacts of disasters. "Every other state allows insurance companies to use them; California did not until recently. Catastrophe models can be helpful and useful; the problem is that many catastrophe models aren't that good; they're based on inaccurate or incomplete information and they don't have any transparency."
Court also decried the lack of transparency in catastrophe models, which he said "can say anything they want, and then we have to pay the rate." He also criticized Lara's proposal to allow insurers to hike rates in exchange for a purported commitment to cover more properties in wildfire areas.
Lara said last year that "insurance companies will write no less than 85% of their statewide market share in wildfire distressed areas,"
However, Court cautioned that Lara is assuming "that the companies are actually going to increase their footprint in wildfire areas."
"When you look at the details... there are these big loopholes," he said. "Insurance companies have to commit to 85% [wildfire area saturation] within two years—or they can do 5% more than they're doing now. So if they're at 0%, they can go to 5%. This is complete bullshit."
As coverage becomes more difficult to obtain, hundreds of thousands of California homeowners have turned to the state's FAIR Plan, an insurer of last resort, which has more than doubled the number of policies issued since 2020.
"If the FAIR Plan is the only thing you can do, take that," DeLong said. "In the meantime, you can reach out to the Department of Insurance and let them know that you want them to protect consumers and reject excessive rate increases."
"You can also try mitigation measures to reduce risk, like clearing brush around your home, improving your roof so it's a Class A roof, which means it's very difficult to catch on fire, you can take measures to prevent embers from starting fires on your property," he added. "The problem is that all of that costs money, and not everyone may be able to afford that… California has recently started some proposals to provide grants to consumers to undertake these measures, and these should be expanded even more."
"There is some good news," DeLong said. "The California Department of Insurance is working on a public catastrophe model, one that would have opportunities for input from consumers, that would be based on data that's fair and open."
"However, that's going to take at least a couple of years to get off the ground," he added.
Court concurred. "We're a long way away from that, and it's not even going to be something that companies have to use, it's something that would be supplemental," he said of the public model. "I think it's giving lip service, but I think it's the right direction. It just needs to be much more aggressive."
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