California Insurance Commissioner Ricardo Lara has requested $1 billion from insurers to support the state’s FAIR Plan after wildfires devastated areas around Los Angeles last month. The FAIR Plan, which provides coverage for property owners unable to secure private insurance, has been overwhelmed with claims.
Lara also directed officials to hire more staff and use all available resources, including reserves and reinsurance funds. Two fires, the Palisades and Eaton fires, burned nearly the size of Washington, D.C., from January 7 until containment, killing 29 people and destroying over 16,000 structures.
As of February 9, the FAIR Plan had received 3,469 claims for the Palisades Fire and 1,325 for the Eaton Fire, paying out over $914 million. “The FAIR Plan must pay claims just like any other insurer,” Lara stated.
The funding request is essential for maintaining payouts, according to the Department of Insurance. However, it could add financial pressure on insurers already struggling with rising catastrophe claims.
Catastrophe risk modeling firm KCC estimated insured losses from the wildfires at $28 billion, making them the most expensive in U.S. history.
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