The ongoing wildfires in Los Angeles may drive significant changes in California’s insurance industry, including potential insolvencies and state withdrawals, according to Daniel Aldrich, co-director of Northeastern University’s Global Resilience Institute.
Drawing parallels to Hurricane Katrina nearly two decades ago, Aldrich suggested potential insolvencies and additional withdrawals from the state’s property insurance market, according to a report from AM Best.
The California FAIR Plan has a significant presence in areas affected by wildfires. Pacific Palisades, one of the regions impacted by recent fires, accounted for $5.89 billion of the plan’s exposure. Statewide, the FAIR Plan reported a 61.3% increase in exposure for the year ending September 2024, reaching $458 billion. During the same period, the number of dwelling policies rose 123% to 248,902.
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