California Insurance Race: Rebuild or Ditch Private Market — SkimNews
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- California's insurance crisis traces to 2015–2020 wildfires that scorched 4 million acres and destroyed 35,000 homes, triggering billions in claims that pushed State Farm and Farmers to begin withdrawing from the state
- The California FAIR Plan, a state-backed insurer of last resort, grew from under 1% to 5% of the market since 2018 and now holds 80% share in some high-risk areas after nearly half of households in fire-prone zones lost private coverage between 2018 and 2024
- November's commissioner race pits state Sen. Ben Allen, who wants to rebuild the private market, against Jane Kim, a left-wing organizer from San Francisco, who wants to ditch private insurance altogether
- The economic toll is mounting: about 1 in 7 California realtors had a home sale fall through in 2024 due to insurance problems, the FAIR Plan ran out of claims money last year, and average premiums could rise 16% this year
- Outgoing Commissioner Ricardo Lara struck a deal letting insurers pass reinsurance costs to customers and use forward-looking catastrophe models, in exchange for commitments to write more policies in risky fire areas
- Homeowner Lynn McIntyre saw Liberty Mutual drop her fire coverage, paid $5,000 extra annually for FAIR Plan coverage, had her post-Palisades Fire claim denied despite her bungalow surviving, and is repairing her home with a nearly $200,000 federal loan
Why it matters: Nearly half of California households in high-fire-risk zones lost private insurance between 2018 and 2024, and the FAIR Plan—a supposed backstop—already ran out of claims money. Whoever wins in November sets the template for how the nation's most wildfire-battered state handles a problem now spreading to lower-risk areas, with 1 in 7 realtors reporting deal-killing insurance gaps and premiums projected to jump 16% this year.
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