The Los Angeles wildfires could threaten California’s already unstable insurance market, which carriers have been fleeing as disasters multiply.
By Sarah Kaplan and Anna Phillips, The Washington PostGlenda, who declined to give her last name, stands near the entrance of her home destroyed by the Eaton fire Thursday, Jan. 9, 2025, in Altadena, Calif.
“We’re marching toward a future where insurance is not going to be available or affordable,” said Dave Jones, who served as California’s insurance commissioner from 2011 to 2018 and now directs the Climate Risk Initiative at the University of California at Berkeley’s School of Law. “There was a lot of optimism the market in California was really turning around,” Kousky said. “The fires raise the question: Is that enough when we’re in an environment of increasing risk?”
The only option for many homeowners became the Fair Access to Insurance Requirements plan: a state-mandated fire insurance association established in 1968 to fill the gaps where private insurers were unwilling to issue policies. Every company operating in California is required to contribute to the plan’s expenses in proportion with its market share in the state.
If claims from this week’s fires exceed the FAIR plan’s reserves, private insurance companies will be required to cover the first $1 billion in shortfall, Jones said.
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