The number of California FAIR Plan policies in Los Angeles' Pacific Palisades area surged 85% year-over-year, rising to 1,430 in the 90272 ZIP code, according to data from the California FAIR Plan.
This significant increase comes as the area suffers extensive damage from one of the wildfires currently burning across Los Angeles.
The California FAIR Plan, the state's insurer of last resort, reported having $377 million available to pay claims as of last week, according to the California Department of Insurance (CDI). The plan also has access to a reinsurance tower for additional financial support.
However, claims surpassing these resources could trigger a special assessment on private insurers providing property coverage in California.
According to AM Best, the FAIR Plan has not yet provided specific loss estimates related to the ongoing fires. In a statement, the organization noted that claims outcomes depend on the type and amount of coverage and the scale of the losses.
Operating on a cash-in, cash-out model, the FAIR Plan’s financial condition evolves daily. The organization stated it continues to monitor its financial status to determine if additional payment mechanisms will be needed to cover all claims.
Aerial assessments from the California Department of Forestry and Fire Protection (Cal Fire) on January 15 indicated that the Palisades Fire may have damaged or destroyed approximately 5,000 structures.
Eight days after the wildfire began, officials confirmed the destruction of 2,101 structures and damage to nearly 400 others. The fire, 19% contained at the time of reporting, continued to threaten an estimated 12,250 structures.
The increase in FAIR Plan policies reflects growing concerns about wildfire risk in the region. In 2019, the FAIR Plan covered 360 residential policies in the Pacific Palisades area. By 2023, this number had more than doubled to 773.
Statewide, the FAIR Plan reported a year-over-year increase of 49,823 residential policies in 2023, bringing the total to 324,954 – a rise of 18%. This growth expanded the FAIR Plan’s share of residential policies to 3.7%, up 0.6% from the previous year.
Cal Fire has provisionally ranked the Palisades Fire as the fourth-most destructive wildfire in California’s history, based on early estimates of over 5,000 structures lost. The most destructive wildfire remains the 2018 Camp Fire, which destroyed more than 18,800 structures, including much of the town of Paradise.
What are your thoughts on this story? Please feel free to share your comments below.