State Farm, the FAIR Plan & California’s Wildfires

State Farm insures close to 250,000 homes and 880,000 motor vehicles in the Los Angeles area. So far, the company says it has received about 6,700 claims related to the wildfires tearing through Los Angeles and areas around the city.

State Farm spokesman Michal Brower said, “State Farm is responding to deliver on our longstanding mission to help people recover from the unexpected.”

So far, State Farm has paid out over $50 million for the claims filed. The company believes that number will increase as more claims are processed and more claims are filed.

Worries now are that California’s FAIR Plan — the insurer of last resort — will not be able to financially cover the billions in claims it is now processing and will process in the future.

If that’s the case — and it likely is — insurers writing policies for the FAIR Plan will have to help beef up the plan’s financial position. In September of 2024 the FAIR Plan had $458 billion in exposure — an increase of 61% over September of 2023.

That figure has likely grown since.

A year ago, the FAIR Plan has just $200 million of surplus and $700 million of cash in its coffers. All that is a year or more ago. Today’s figures aren’t readily available but according to FAIR Plan stats, it has $5.9 billion in exposure in the Pacific Palisades area where the Los Angeles area wildfires are still burning out of control.

Companies that assess disaster damages are predicting damages in the tens of billions of dollars. Some say between $30 billion and $40 billion in physical damages and economically somewhere between $150 billion and $275 billion.

Source link: Insurance Business America — https://bit.ly/4g8yxpO

Source link: Insurance Journal — https://bit.ly/4g9FSW6