Fires could impact price of insurance in Oakland
Will the string of fires in Oakland prompt a hike in commercial and residential insurance rates there? Not yet, experts say — but insurers definitely pay attention to such trends.
The huge fire that ravaged a commercial and residential development site near downtown Oakland on Friday was just one of several fires in recent months. While most of the conflagrations seemed unrelated, each raises the question anew if the city is doing enough to crack down on potentially dangerous building conditions.
California’s $123 billion insurance market, one of the largest in the world, is regulated by the state’s Department of Insurance. Insurers must submit applications for rate increases. Just pointing to a few fires and claiming a city doesn’t have strict enough building codes isn’t enough for an insurance company to justify a rate increase, said Nancy Kincaid, a department spokeswoman. Insurers need to prove that such factors have caused them a history of losses.
One Oakland insurance agent, who declined to provide
his name because he was not authorized to speak to the media, said he does not factor recent fires into businesses’ insurance quotes.
But, he added: “If there are a couple more, then at some point you’re going to start asking yourself, ‘What is the common denominator here?’ ”
So far, there is no clear link between the recent fires. A deadly blaze at a halfway house was probably ignited by a candle, while the cause of others — including the Ghost Ship fire at a warehouse occupied by artists — are still undetermined. A few of the recent fires have been at construction sites, one of which has been deemed arson. Friday’s fire is under investigation by the Alameda County Arson Task Force and the federal Bureau of Alcohol, Tobacco, Firearms and Explosives.
The recent fires have happened at a mix of buildings — some residential, some commercial, others mixed-use. It was not immediately clear who insured them.
While commercial and residential insurers use different data to determine rates, they ask similar questions when assessing fire risk. For example: What is the severity and frequency of the fires? How many structures have been lost? What was the source of the blaze?
“We can’t know what will happen to the rates until we see the data — but you can be sure that those losses will be in the actuarial tables when insurance companies propose rate changes,” said Doug Heller, an independent consultant to consumer groups. “But we’re not sure how much of an impact they’ll have.”
Or, instead of raising rates, Kincaid said, a trend of fires or building code violations could just turn certain insurers off the market. There’s a word for that, she said: “uninsurable.”