We’re Covered! Fire Insurers Say They Can Handle Claims

LOS ANGELES– Experts say insurance companies are sufficiently well
capitalized to handle the flood of claims that will arise from the
Southland’s latest wildfires, it was reported today.
“The majority of those who lost their homes do not need to worry
about the solvency of companies they’re insured with,” Amy Bach,
executive director of United Policyholders, a San Francisco advocacy
group, told the Los Angeles Times. “They’re all reasonably solvent and
perfectly capable of covering all these claims.”
After years of booming profits and a general aversion to risky
investments within the property casualty arms of their companies,
insurers are well capitalized to handle the latest fire claims and are
not as vulnerable as other financial institutions, several experts told
The Times. Even American International Group Inc., the massive insurer
that needed a $150 billion federal bailout from losses stemming from the
real estate crash, said it was comfortably honoring its policies, The
Times reported.
“AIG’s insurance companies are well-capitalized, separate legal
entities that are regulated by the states,” Peter Tulupman, a company
spokesman, told The Times. “AIG’s issues have not altered our
underwriting process or ability to write risks.”
But Doug Heller, executive director of Consumer Watchdog, told The
Times he believes insurance companies are understating their investment
loses after the subprime meltdown and will eventually try to recover
those losses by raising rates.