Torres seeks to bar insurers from canceling policies after disasters.

State Sen. Art Torres, following reports that insurance companies are canceling policies in brush fire areas in Northern California, is calling for a six-month moratorium which would prohibit insurers from canceling homeowners' policies after a disaster.

Torres, the Los Angeles Democrat who chairs the California Senate Insurance Committee and who is considered to be a candidate for insurance commissioner in 1994, said his office has recently received complaints that homeowners' policies have not been renewed in the Northern California brush fire areas.

Specifically, realtors in Oakland have told his office that "they are not able to close escrow" because would-be homeowners are not able to find insurance in the area that was devastated by fires in 1991.

Torres has been holding workshops for victims of the Oakland, Malibu and Laguna fires. "Right now it seems it is not a problem in Southern California. The anecdotal evidence is that it's coming from the north," he said.

Torres said his staff is investigating whether the California insurance commissioner has authority to issue such a moratorium. If the power exists, Torres said he will ask Insurance Commissioner John Garamendi to use it to prohibit insurers from canceling policies in areas affected by brush fires.

If the commissioner doesn't have the authority, Torres said he will introduce legislation in 1994 to give the insurance regulator that power. Torres noted the Florida legislature passed a similar measure after Hurricane Andrew caused more than $10 billion in insured losses in that state.

Meanwhile, a spokesman for Garamendi said the commissioner has decided not to issue a moratorium, after meeting with major insurers.

Spokesman Bill Schulz told the Business Journal last week that Garamendi called a meeting of insurers earlier this month after hearing complaints that insurance companies were canceling homeowner policies in high-risk areas.

Garamendi met with or communicated with insurers representing 80 percent of the California homeowners' insurance market, Schulz said.

"The purpose of the meeting and the communication was to make an assessment as to whether we were seeing excessive cancellation in high-risk areas that was affecting the availability of homeowners' insurance," Schulz said.

Based on information gathered by the department through the interviews with insurers and other sources, "We have not seen a number of cancellations which would give us concern that a moratorium at this point would be appropriate," Schulz said.

Asked if Garamendi had the authority to issue a moratorium, Schulz said, "He has some broad powers concerning insurance company behavior."

In addition to concerns about cancellations, Garamendi told the Los Angeles Times he warned insurers not to use the fires to support requests for rate hikes.

Roger Tompkins, director of California operations for State Farm Group, the state's largest insurer, said the state Department of Insurance "asked us if the wildfires have changed your marketing plans" for writing homeowners' policies.

"Our answer is going to be that we are not going to change our coverage because of the wildfires," Tompkins said.

Meanwhile, Property Claims Services, the Rahway, N.J.-based national insurance authority on disasters, placed its estimate for insured losses caused by the Southern California fires at $950 million.

That estimate would rank the fires as the second most costly disaster to the insurance industry in 1993, after the so-called storm of the century, the blizzard which devastated states up and down the Eastern seaboard in March, which caused $1.7 billion in insured losses, said Jim Welsh, claims consultant.

Property Claims estimates that the Malibu fire caused $375 million worth of insured losses and the Laguna fire $435 million, Welsh said.

The Altadena fire and other small Southern California fires which blazed between Oct. 26 and Nov. 5 caused about $140 million of insured losses, he said.

"If you count it as one disaster, it would be the second biggest fire disaster since we started keeping records," Welsh said, adding that Property Claims has kept records since 1949.

The biggest fire disaster on record was the Oakland fire of 1991, which caused $1.7 billion worth of insured losses, Welsh said.