Some insurance market info and guesses for those interested.
With all the insurance companies pulling out of high-risk areas of CA, the FAIR plan's dwelling exposure rose to $458BN in 2023 (plus $26BN commercial). Pacific Palisades was one of FAIR's top ten highest wildfire exposures at $5.9BN in 2023. More insurers pulled out in 2024, so FAIR's exposure would be at least $6BN now. Figure almost all of that $6BN is now a loss, plus some of whatever it has in Altadena, not in the top ten.
FAIR, like all last-resort insurance plans, does not have assets or re-insurance sufficient to cover major catastrophic losses - instead it has the ability to surcharge all insurance in the state. Edit: FAIR has about $2.5BN re-insurance total (no idea how much covers these areas) and $240MM cash. Similar to the FL last-resort plan, which I think should be also on the brink after Helene and Milton. So figure that's $6BN that may have to be surcharged broadly.
Total homeowners' multi-peril premium in CA was $13.7BN in 2023. Maybe $15BN now?
So spread $6BN over $15BN and that suggests a possible 40% surcharge. I don't know if CA can spread that over multiple years - not sure how, unless state wants to issue bonds.
On top of that, CA needs to keep private insurers in the state market if not draw back the ones who have been pulling back which is almost all of them. Recently CA changed its insurance rules to permit, essentially, much higher premiums via model-based underwriting and passing on re-insurance costs. That was already expected to raise premiums very substantially.
And before any of this, CA was already being forced to permit significant premium increases - I read Farmers (#2 carrier in state) got approval to raise homeowners' rates 34% after years of being limited to 7%.
So how much premium increase in high-risk areas are insurers and re-insurers going to need now, to keep them from pulling out? State Farm (#1 carrier in state) non-renewed 70% of its policies in Pacific Palisades last year which was 1600 homes, leaving 600-700 homes, at $2MM a pop that is around $1.3BN loss plus contents, temp housing, etc - that's like half a years of its CA homeowners premium income, gone. State Farm has been losing $BNs a year already - I'd think premiums will have to have to get much richer, not a little richer.
So my guess is CA homeowners premiums could go up as much as 2X broadly, and 3X or more in high-risk areas.
Sounds nuts and inconceivable, but that's what the numbers and losses imply. Can someone pull a rabbit from a hat?
Sounds unfair to those not in high-risk areas, but more areas are/will be "high-risk" than we might think.
Consumer advocates, homeowners, CA insurance commissioner, insurance industry are all going to scream at each other, but at the end of the day its Mother Nature with the last word.
Some info here
https://content.naic.org/sites/default/files/publication-msr-pb-property-casualty.pdf
https://www.cfpnet.com/key-statistics-data/
P.S. Sorry if this upsets anyone. I've been accused of having a conflict of interest because I invest in industries we talk about. Like what I say here changes anything. I think the insurance industry looks good - has for some years, actually - with the "hard" market going to be harder for longer. Like Viagra. Oh and the interest rate outlook is also improving (going up) at short and long ends. Double hardness.