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Wildfire in the western U.S. drives up reinsurance rates for electric co-ops

A large fire and plume of smoke burning down trees.
U.S. Bureau of Land Management
U.S. Bureau of Land Management

Montana electric cooperatives say insurance liability rates are increasing due to wildfire risk.

Montana electric cooperatives say their insurance liability rates are increasing because of wildfire risk.

The 13,000 member-owners of Missoula Electric Cooperative are paying about three times as much for liability insurance than they did in past years, according to the co-op’s general manager Mark Hayden.

That’s in part because reinsurance — a form of outsourced risk — is now harder to get.

Hayden told state lawmakers on Tuesday that the co-op increased its coverage, but only won the confidence of reinsurers by submitting a Wildfire Mitigation Plan outlining the ways in which the co-op will prevent wildfire starts and avoid liability.

“Reinsurers said the fire risk is just too high in Montana. Many of them pulled out," Hayden said. "And we, because of our plan, were able to secure that additional coverage, but some were not, and it’s just an indication that it’s getting more difficult and more expensive obviously to get insurance."

Kansas-headquartered insurance company Federated Rural Electric Insurance Exchange, which serves all but one of Montana’s co-ops, testified Tuesday that reinsurance companies have been reluctant to cover electric utilities for wildfire since 2017, when powerlines sparked a massive wildfire in California.

Kayla writes about energy policy, the oil and gas industry and new electricity developments.