WASHINGTON >> Insurers are quietly reducing their exposure to fire-prone regions across the Western United States, putting new pressure on homeowners and raising concerns that climate change could eventually make insurance unaffordable in some areas.

Officials in California, Washington, Montana and Colorado are getting more complaints from people whose insurance companies have refused to renew their coverage. The complaints follow years of record-setting wildfires in both size and cost, a trend that scientists expect to continue as global warming accelerates.

“I think that we are not far away from a lot of weather-related events being too expensive for most people to purchase comprehensive coverage,” said Carolyn Kousky, executive director of the Wharton Risk Center at the University of Pennsylvania. “What happens then is the big question.”

On Tuesday, California’s Department of Insurance issued a report quantifying that pullback. For the ZIP codes most affected by the wildfires in 2015 and 2017, the number of homeowners dropped by their insurance companies jumped 10% between 2017 and 2018.

In the 10 California counties with the most homes in high-risk areas, the number of homeowners’ policies written by major insurers, whose rate increases must be approved by state regulators, fell by 5% between 2015 and 2018, the department said.

Another way of measuring the growing reluctance of insurers is the increase in demand for the state’s FAIR plan, which is effectively prohibited from turning away customers but typically charges higher premiums as a result. In those same 10 highest-risk counties, the number of homeowners getting coverage through that plan increased 177% while staying flat statewide.

“By not being able to find insurance, you then in turn can’t sell your home. If you can’t sell your home, then it affects the local property taxes,” said Ricardo Lara, California’s insurance commissioner. “This is really creating chaos.”

The trade group representing insurers said the fires of the past two years had compelled companies to reduce their exposure. Whether that pullback is temporary or permanent depends on what the state does next, according to Rex Frazier, president of the Personal Insurance Federation of California.

Frazier said the state should allow insurers to raise rates to better reflect the full cost of wildfire risk. He also called for more aggressive forest management, such as controlled burns to remove trees, brush and other fuel for wildfires, as well as requiring homeowners to keep more space between their houses and the vegetation around them.

The alternative — continuing to build homes in dangerous areas, combined with worsening fire conditions and premiums that do not reflect the true risk of wildfires — is “not the recipe for a healthy market,” Frazier said.

Versions of that trend are playing out across the West. In Washington state, officials have been receiving more complaints from people in wildfire-prone areas about insurance companies, according to Mike Kreidler, the state’s insurance commissioner.

“Some companies are starting to reevaluate their position in certain geographic areas, largely driven by eastern Washington right now, or at least we think so,” Kreidler said.

In response to that concern, his office sent a request to insurers in July, asking for information about whether and how those companies have reduced their coverage in fire-prone areas. He gave companies until early September to report back.

“Are they continuing to insure at the same levels?” Kreidler asked. “Are they backing off on the number of policies they’ll write?”

In Montana, insurers have changed the way they evaluate wildfire risk, according to Bob Biskupiak, the state’s deputy insurance commissioner.

Decisions that were once made based largely on how quickly a fire department could reach the property now involve third-party analytics companies, Biskupiak said. Those companies examine everything from the surrounding timber and grass conditions, the slope of the ground, where the prevailing winds come from and the conditions on nearby land.

“It’s not necessarily the property that’s being evaluated,” Biskupiak said. “It’s about where the fire could potentially start.”

Insurers have used that information to be more discriminating about what they choose to cover. “Company A, B or C has insured me for 10 years — I’ve never had a loss,” Biskupiak said, recounting the type of complaint he’s heard. “And then all of a sudden this year they’re nonrenewing me.”

This month his office issued a public notice warning companies against refusing coverage just because of a wildfire elsewhere in the same ZIP code or county.

“The state auditor’s office has recently received several phone calls and heard from local officials in Lewis and Clark County that some insurance companies are denying coverage for homes, cars, and boats due to the North Hills wildfire, even though the properties weren’t located anywhere near that fire,” the department wrote.

Colorado has also seen an uptick in complaints, according to Peg Brown, the state’s deputy insurance commissioner. She said her office was considering instructing insurers to provide more data on how many people are being dropped so it can measure the change.

“It’s a significant issue,” Brown said. “We’re trying to get a little bit ahead of it.”

The question is whether insurers will move back into those areas if their financial reserves recover and the memory of damage fades, as has sometimes happened after previous large-scale disasters, according to Kousky of the Wharton Risk Center.

She said there’s reason to believe this time is different.

“These perils are changing,” Kousky said. And if the pullback by insurers proves lasting, it would require a greater role for governments in financing reconstruction after disasters, while compelling a shift in where and how we build homes. “There’s not one solution that would nicely solve this,” she said.

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