The California FAIR Plan, the state’s insurer of last resort, has reported a combined exposure of approximately $4.8 billion due to the Pacific Palisades and Eaton fires in the Los Angeles area.

The FAIR Plan’s potential exposure is over $4 billion for the Pacific Palisades Fire and more than $775 million for the Eaton Fire, according to an update provided to BestWire. The FAIR Plan insures about 22% of the structures affected by the Pacific Palisades Fire and 12% of those impacted by the Eaton Fire, based on the Cal Fire incident maps.

"While each fire is unique, for context, actual claims following a fire have historically represented, on average, about 31% of the total exposure in that area," the FAIR Plan noted. The update clarified that "exposure" refers to the total amount of insurance for properties, not the actual number of claims or anticipated claim payments.

As of January 17, the FAIR Plan had received more than 3,600 claims. The types and amounts of claims vary, and the FAIR Plan is actively engaging with those who have filed claims, with the financial resources in place to ensure all claims are addressed.

In the Pacific Palisades area, the number of policies under the FAIR Plan increased by 85% year-over-year, reaching 1,430 policies in the 90272 ZIP code, an area significantly impacted by the fires.

As of January 6, the FAIR Plan had $377 million available to cover claims, according to the California Department of Insurance. The plan also has access to a reinsurance tower, which could be accessed if claims exceed this amount. Any claims beyond the available resources may result in a special assessment of private insurers in California.

The FAIR Plan can access reinsurance once the first $900 million in claims is incurred, with full access to the next $350 million, subject to specific conditions. After the initial $1.25 billion in claims, various levels of co-insurance come into play, with reinsurers and the FAIR Plan sharing up to $5.78 billion in total exposure.

According to BestLink, the five largest homeowners multiperil writers in California in 2023 based on direct premiums written were State Farm Group (19.92% market share), Farmers Insurance Group (14.93%), CSAA Insurance Group (6.52%), Liberty Mutual Insurance Cos. (6.5%), and Mercury Casualty Group (6.11%).