Montana State Auditor Orders Insurers to Drop Wildfire-Related Moratoriums

August 4, 2000

State Auditor Mark O’Keefe told all property and casualty insurance companies doing business in Montana to lift all blanket wildfire-related moratoriums on new or increased levels of property insurance, or face possible legal action.

O’Keefe’s office was recently made aware of the freeze on new business by concerned consumers. Some carriers are allegedly refusing to issue any new coverage or issue increased levels of coverage to property owners based on area codes on the basis that all property within certain area codes are at risk of wildfire.

“Some insurance companies are essentially saying through their actions that homes within city limits are at the same level of risk as those located in forested areas,” said O’Keefe. “That’s flat-out wrong, unethical, and unfair. Montanans will not stand for such treatment and I will enforce the law to make sure it doesn’t happen.”

“We are talking about a business decision here that is harmful to Montanans. It’s against the law and we will take strong action unless these practices are modified immediately.”

O’Keefe, in an advisory prepared yesterday for all property/casualty insurance companies, said such a practice is in violation of 33-18-210(5), MCA, which states that an insurer may not refuse or limit coverage because of the geographic location of the risk.

“If a person’s home is in the line of the fire, then there may be an imminent risk and an insurance company may be justified in refusing coverage,” he added. “But insurance companies need to be making an effort in making that determination on a case-by-case basis instead of placing a freeze on all new business without evaluating the situation.”

O’Keefe said such practices also hold the potential to threaten Montana’s economy, as mortgage companies require proof of insurance before a deal can be closed on the purchase of a piece of land or house. It could even preclude homeowners from insuring additions on homes and businesses in the state, he added, placing a crimp on the state’s construction industry.

“The wildfires pose no imminent peril in the Helena valley, the city of Great Falls, the city of Missoula, or Billings” O’Keefe stressed, “and for these companies to represent otherwise is a reach at best. Our firefighters are professionals and to imply that our communities are at risk because of a fire that is burning 30 miles away is hogwash. We will not allow these companies to discriminate against our communities or our residents.”

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