As dawn breakes firefighters continue to battle wind and fire as homes go up in flames in Malibu along PCH near Carbon Cyn Road in the Palisades Fire on Wednesday, Jan. 8, 2025 the state following almost a decade of increasingly destructive, climate-driven wildfire seasons. But with the changes yet to take full effect, experts say the billions of dollars in expected new insurance claims in Southern California could“There are going to be some companies that are severely hit by the L.A.
In recent years, insurers have already hiked rates and ended hundreds of thousands of policies statewide. An insurance meltdown kicked into overdrive by the latest fires would likely have far-reaching consequences. “We’ve had issues over the years of insurance companies canceling the policies because of the type of structure and the landscape of our property,” Linerud said. “So any excuse of an insurance company to bail out, they’re going to use, and I’m worried about that.”
The California Department of Insurance on Wednesday announced an emergency declaration by Gov. Gavin Newson that would protect homeowners in the immediate area of the fires from losing their insurance due to wildfire risk for one year but did not respond to questions about the fires’ impact on the broader insurance market.
Consumer advocates maintain the deal will do little to benefit struggling homeowners, singling out the rate-setting change that allows companies to use forward-looking “catastrophe modeling” programs to calculate premiums. They claim this will enable insurers to raise rates through an opaque process they liken to a “black box.” While state insurance regulators must still approve rate increases, advocates say companies will be emboldened to hike homeowners’ rates to offset their losses in the L.
Over the past half-decade, the number of homeowners on the plan — a state-mandated insurance pool with buy-in from private insurers — has more than doubled to around 350,000. That’s pushed the FAIR Plan toward the brink of insolvency.