Arizona Puts the Heat on Insurers for Wildfire Protection

As wildfire season stretches across the Western states from June through September, Christina Urias, director of the Arizona Department of Insurance, has lit a fire under agents and insurers to work with their clients to ensure they are properly protected from potential fire damage.

For the past three years, Urias has encouraged companies to “audit” policyholders’ coverage regularly to ensure it is adequate. Policyholders “have some personal responsibility to check their coverage, as do companies, using the tools that they have available to them to make sure the numbers they are recommending to their policyholders are accurate and as close as possible,” Urias said in a recent exclusive interview with Insurance Journal’s Andrew Simpson. “What I mean by that is reevaluating every year, some every three years depending on their volume of business … to get an accurate measure on the appropriate dwelling coverage.”

Urias shared her state’s proactive approach to mitigating loss from wildfires and handling other issues in a video interview, one in a series of 15 interviews with state regulators titled, “The Commissioners.” The 15 interviews now are available for viewing in the video feature section on the Insurance Journal Web site at http://www.insurancejournal.com/broadcasts/.

According to the Insurance Information Institute, Arizona had one of the nation’s most catastrophic wildfires between 1970 to 2005. A blaze in Rodeo-Chediski Complex in June 2002 caused $120 million in insured property damage.

The state faced another serious fire one year later, the Aspen fire, so Urias has spent the past three years working to ensure homeowners and businesses have the resources they need to recover following a fire.

After the Aspen fire, “we found an under-insurance problem in our state, across all company lines, in that the amount of dwelling coverage that individuals had was perhaps inefficient,” she said. “This area had not been monitored as well by the agents, the brokers and the insurers themselves. So, we initiated some market conduct examinations … the cooperation was excellent.”

Urias said companies “jumped in” to work with the department because “they recognized the problem.”

Based on those market reviews, Arizona initiated reforms and “best practices,” recommending agents and insurers audit customers’ policies to ensure enough resources are available when they need them.

This approach to wildfire coverage is “a win-win situation” for companies, Urias said. Because of the audits and more frequent meetings with customers, companies are “writing more business and collecting more premiums, and their policyholders and the consumers are glad because they have a better feel that their insurance coverage is appropriate,” she said.