California Wildfires Threaten Insurers Already Teetering From Climate Shocks

The New York Times ^ | Jan. 8, 2025 | Christopher Flavelle

[E. Pluribus Unum]

Companies started pulling back from the state as earlier fires made it harder to turn a profit. Experts warn the exodus could grow.

It’s too soon to know the financial cost of the wildfires burning around Los Angeles. But the toll on California’s troubled insurance market could be enormous.

The fires struck just as California officials have been working to stop insurance companies from fleeing their state.

That exodus, driven by rising losses from wildfires that have grown larger and more frequent, could accelerate because of this week’s fires, experts said.

“The California insurance market has been balanced on a knife edge,” said Nancy Watkins, an insurance expert and principal actuary at Milliman, a consulting firm. As homeowners begin filing claims, insurers that cover large numbers of dwellings in Southern California could see a drain on their financial reserves, forcing them to drop customers, be punished by investors or exit the state.

If insurers keep leaving California, it would drive up insurance rates that are already elevated and make coverage harder to find, said Sridhar Manyem, senior director for industry research and analytics at AM Best, a company that rates the financial strength of insurers.

The Los Angeles fires pose another threat to California’s insurance industry, beyond the money those companies will have to pay directly to their customers.

In the areas hit by this week’s fires, many homes are insured through a state-backed system called the California FAIR Plan, designed to be a last resort for homeowners who cannot find insurance coverage on the private market. The plans are more expensive and provide less coverage than commercial versions.

The number of homes in the ZIP code affected by the Palisades fire that are enrolled in the FAIR Plan almost doubled between 2023 and 2024, said Tim Zawacki, an insurance sector strategist at S&P Global Market...

[Ruy Dias de Bivar]

I remember reading of a town fire in the early 1800s that caused several insurance companies to declare bankruptcy.
Would not be surprised to see the same thing in California.

[rdcbn1]

The wild fires in LA have nothing to do with climate change and everything to do with California's dysfunctional and failing government leadership and their insane political agenda. One cost of the LA wild fires is going to be massive restructuring of California's failing insurance system. All of California's insurance markets are on the brink or past the brink of actuarial unsustainable

This non sustainability and impending insolvency is due to the fact that California's draconian regulation of insurance providers to prevent "consumer price gouging" does not allow insurance companies to charge enough in insurance premiums to cover the astronomical and totally out of control costs to underwrite the losses generated by California politicians desire to force insurance companies to underwrite the liquidated financial costs of their failed social engineering political mandates.

This is across the board in all forms of insurance.

California is on the brink with health insurance, auto insurance, liability insurance, home insurance and just about every other form of insurance there is - save one. And that is the pet health insurance which is thriving because California has not gotten around to regulating and screwing it up yet.

Yup, it's very probable that your Golden Retriever has better access and more affordable heath care than you do. At least for now.

California pols have a long history of socializing the costs of their dysfunctional and unworkable agenda. California is such a huge and rich market that Insurance companies have up until recently been able to pass the costs onto the consumer.

But just like everything else in California, the costs of California's mushrooming politically mandated dysfunction have outpaced the ability to afford them. In the past, California Pol's preferred solution to this problem has been to double down on the dysfucmntion that is driving costs to astronomical levels while having the Insurance Regulators mau mau the insurance companies to force them to charge premiums too low to cover costs of claims.

[E. Pluribus Unum]

The wild fires in LA have nothing to do with climate change and everything to do with California's dysfunctional and failing government leadership and their insane political agenda.

[Expletive Deleted]

[P-Marlowe]

FEMA is useless. They did nothing for Lahaina, Paradise or North Carolina. Their job is just to pretend they care.

There is not enough money to fix this disaster. It could have been avoided, but the environmentallists insisted on letting nature take its course. It did.

When the righteous are in authority, the people rejoice: but when the wicked beareth rule, the people mourn. Proverbs 29:2 KJV

[Falcon4.0]

I was wondering how long it would take to blame the fires on “climate change”.

[Redleg Duke]

Could someone please cut off the supply of Dumbshit pills to the Old Grey Whore?

[PIF]

The state is out of money so these homeowners are going to be homeless for a long time.

—
How can that be? Newscum was just touting the state’s budgetary surplus.

[xzins]

Maybe $700 bucks.

They’re pathetic

[PIF]

I was wondering how long it would take to blame the fires on “climate change”.

—
As long as it takes for these Californians to keep voting Democrat.

[eyeamok]

The smart ones started clearing out their offices yesterday, I think they will all leave because the FAIR plan is backstopped by the Insurance companies

[Texas Eagle]

Oops. Sorry for that private reply I sent you. It was meant for this thread and directed at insurance companies not you.

[dpetty121263]

Voters of California invited all this, I personally am against any bailouts for them.

[frank ballenger]

RE: The fires struck just as California officials have been working to stop insurance companies from fleeing their state.

Do Re Mi by Woody Guthrie (folk singing communist in the 1940s)

Oh, if you ain’t got the do re mi, folks
You ain’t got the do re mi
Why, you better go back to beautiful Texas
Oklahoma, Kansas, Georgia, Tennessee

You want to buy you a home or a farm, that can’t deal nobody harm
Or take your vacation by the mountains or sea
Don’t swap your old cow for a car, you better stay right where you are.

California is a garden of Eden
A paradise to live in or see
But believe it or not, you won’t find it so hot
If you ain’t got the do re mi

[sauropod]

Ping!

[catnipman]

“Will State Farm raise house insurance in States far removed from the ‘Rat Utopia of Calif.?”

no doubt ... and as a State Farm customer, it’s something we are very aware of and have been discussing for a few days now ...

the sins of california wokeism are being foisted upon the rest of the nation ... and not just insurance, but their insane insistence on battery driven 14-wheelers, emergency vehicles and power tools [you know, the ones used to fight fires and the ones that OUGHT to be used to keep brush and forest litter cleared] ...

[mewzilla]

This is the state offered plan that got so many sign-ups after State Farm got cold feet...

https://www.insuranceinsider.com/article/2e9ha9eunmfy1kjgo9340/all-topics/catastrophe-losses/california-fair-plan-pacific-palisades-exposure-at-6bn

Holy Obamacare, Batman!

[mewzilla]

FEMA isn’t useless to Deep State.

But FEMA and its more than 21,000 employees are there to grow the public payroll.

At that it’s quite good.

[catnipman]

“Companies started pulling back from the state as earlier fires made it harder to turn a profit. “

that dirty word “profit” is great propaganda to the anti-capitalist, anti-U.S., anti-MAGA fascist propaganda media ...

no, NYT, the problem isn’t “profit”, it’s “solvency” ... insurance companies go bankrupt if they pay out more than they are ALLOWED by corrupt state insurance commissions to charge ...and then when the national companies go bankrupt, the rest of us NOT in california suffer too ...

but i’m sure it makes your few remaining readers deliriously happy to read all about those evil insurance companies ... that is, until they themselves can no longer buy insurance because the insurance companies were bankrupted by corrupt state insurance commissions ... and then they’ll scream and whine, “Why can i no longer buy insurance from an evil insurance company?” ...

[Sirius Lee]

Teetering From Climate Democrat Shocks

Fixed.

[Rlsau1]

Florida has similar problems with insurance companies in that State Regulators will not allow realistic premiums to be charged for the most at risk areas. If a structure is located in a disaster prone area the premium should reflect it. While this would mean only the very rich could afford beach housing or much more modest structures, the rest of us wouldn’t have to support it.. Building a $million plus mansion on the beach is kind of stupid if you think about it.