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Wildfires Heat Up Jemez Co-Op Insurance Costs

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CLR las conchas fire la sign

Flames illuminate the sky outside Los Alamos during the Las Conchas Fire in June 2011. The recent wildfires in California have led to increased liability insurance costs for Jemez Mountains Electric Cooperative

The Jemez Mountains Electric Cooperative’s general liability insurance coverage costs will rise 13 percent, despite increased tree-trimming efforts and a series of secret settlements following the 2011 Las Conchas Fire.

The annual premium rose from $135,303 in the 2018 to 2019 coverage period to $149,027 in 2019 to 2020.

Co-op Insurance Broker Kitty Leslie, who works for HUB International, said she started with a 47 percent increase but negotiated it down to 12.6 percent with the Co-op’s new provider Hartford Insurance.

Leslie made plans in September to present insurance rates at the Nov. 16 Co-op Board of Trustees meeting, which means she began negotiating rates with the insurance company months in advance.

Despite this, the insurance company wanted to raise the rate in response to the California wildfires.

Leslie said she immediately went back to Hartford to talk about the general liability coverage when she found out about the massive tort claim filed against Pacific Gas and Electric Company after the Camp Fire broke out in California on Nov. 8.

Hartford Insurance knows the Co-op’s service area includes forests and parts of the of the southern Rocky Mountains with lots of vegetation, Leslie said.

She held the company’s “feet to the fire” to limit any premium increases caused by concerns over the Camp Fire.

“PG&E is really going through what I think Jemez understands with the Las Conchas Fire,” she said.

Leslie has also raised the Co-op’s general liability coverage to $42 million since the Las Conchas Fire.

Although the Co-op is seeing a rise in general liability insurance costs, that does not mean all Co-ops in heavily vegetated areas will experience the same thing.

Northern Rio Arriba Electric Cooperative General Manager Abran Romero said NORA’s policy renews every two years and will not be renewed again until 2020.

He does not anticipate a rate hike such as the one experienced by Jemez Co-op because it has not had a large-scale fire.

“We are insured with Federated Rural Electric (Insurance Exchange) and they are a cooperative-owned or member-owned insurance that specializes in rural electric cooperatives,” he said.

Federated has a safety program and NORA must meet certain safety standards and guidelines, Romero said.

“They come in and do safety inspections and we are also RESAP (Rural Electric Safety Achievement Program) certified,” he said.

Part of rural electric cooperative safety is tree-trimming.

The difference between the Jemez Co-op and others is size.

The Co-op’s coverage area spans five counties and includes thousands of miles of transmission lines that run through private, U.S. Forest Service land, state, Rio Arriba County, city of Española and pueblo lands.

Romero said there is about 45 miles of transmission and 400 miles of distribution lines in NORA’s coverage area.

NORA has an in-house tree trimming crew and hired a Colorado company that specializes in clearing transmission line rights-of-ways, he said.

The Co-op’s Nov. 16 financial presentation stated as of October, the Co-op had 4,125 miles of line.

Co-op General Manager Donna Montoya-Trujillo said they have increased their in-house tree-trimming crew over the last year.

The Co-op was found 95 percent responsible for the Las Conchas Fire, which started when a tree branch hit an electric line and ignited.

Leslie said that she loves that the Co-op increased the tree-trimming crew and that it would usually help her on general liability insurance negotiations.

Workers' Compensation

The Co-op’s workers compensation insurance cost is also rising due to multiple claims filed in 2017.

The premium rose from $151,833 to $225,724.

“I am sorry to report we have a 1.62 modifier and that is not a great thing,” Leslie said. “That is an experience modifier. It means you are having a 62 percent debit over the base rate on your premiums for 2019.”

There were three serious losses in the last two years, she said. The claims were related to insect bites.

The losses due to these three incidents were close to $140,000 and the insurance company lost money, she said.

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