By REBECCA MOSS The Seattle Times/TNS
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Nationally, use of wildfire risk scores that predict the possibility of natural disasters destroying homes is rapidly becoming the industry standard. In places like California, where the severity of wildfires — and the insurance ramifications — are most blatant, some lawmakers and regulators are taking action.

California publicly tracks nonrenewals and requires insurers to be transparent about risk assessments and to allow homeowners to appeal their scores. A new law passed this spring in Oregon attempted to block state risk maps from influencing insurance policymaking.

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But Washington does none of this, meaning the full scope and impact of nonrenewals in the state is unknown.

To the Washington residents who filed complaints about lost insurance, the state repeatedly said there was little it could do. “We unfortunately cannot tell or force the company to reinstate the policy,” state compliance analysts wrote back. “No violation found.”

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WHAT’S A WILDFIRE RISK MODEL?

Risk models were first designed by the federal government to help homeowners identify proximity to possible natural disasters and take steps to withstand them.

But as the cost and scale of disasters escalated, insurers began using these models to inform underwriting decisions — with increasing sophistication and advancing technology.

Yet the models used to deny coverage are far from uniform and often obscured from consumers, making their use largely at the will and interest of the company. Insurers employ various third-party vendors that draw from different data sources and consider different factors for insurability.

Most employ a melange of satellite images, census data, historic fire information or climate projection that can roughly determine a home’s probability to burn — not only today, but over the next 30 years.

The definition of “high risk,” therefore, is highly subjective.

This practice has left residents at a loss. Home and business owners say they have done everything to make their properties fire-safe — and even been assured by local fire chiefs, or worked with the state Department of Natural Resources, to ensure that their home, or community, has a low risk of wildfire.

But the best way to protect a home from fire is also not standardized, and so insurability can come down to a simple bottom line: an address or ZIP code-based fire score.

“I have done all the right things but yet without even knowing me, or coming out to visit my property — anything — they said we don’t want you, get lost. After 21 years,” said Ernst Bentsen, a former Pemco customer.

Dawn Lee, Pemco Insurance vice president, said in an email that the company made “the difficult decision” to reduce less than 1% of coverage to homes in Washington and Oregon to balance its overall risk.

“Because of the changing dynamics of wildfire risk and our concentration of homeowners policies, however, a policyholder can do all these things [to reduce risk] and we are still no longer able to insure their property.”

Lee said this became necessary for Pemco and many other insurers because of the increasing threat of wildfires regionally, inflation and the growing number of homes built in wildfire-prone areas.

Residents say they are struggling to find new policies and end up paying much higher rates, or can only obtain partial coverage. The Fishers’ new fire policy will cover less than half the value of their home, far less than they would need to rebuild.

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GROWING NUMBER OF NONRENEWALS

Eric Kossian had run an independent, statewide insurance agency in Leavenworth for 18 years when he noticed an alarming trend. Dozens of homeowners were being dropped from longtime insurers, despite never having filed a claim. Each was given the same rationale: wildfire risk scores. Kossian said he has rewritten more than 100 policies in the last year alone. The previous year he saw just one such client.

“It is a pretty dramatic thing,” he said of wildfire risk scoring. Kossian said many premiums have more than doubled and new buyers are unable to find home insurance or afford the cost when they do.

Insurance through the larger companies regulated by the state, known as preferred or admitted carriers, is also harder to come by, he said. Instead, Kossian has seen an increasing reliance on surplus carriers for insurance, which are able to charge higher premiums without approval from the state.