Insurers reckon with the losses from the Californian wildfires

California’s home insurance plan of last resort, or FAIR as it called, has run out of funds to pay Los Angeles fire claims. State regulators announced that it will receive a $1 billion bailout, according to the Washington Post. 

The bailout follows two of the most destructive fires in the state’s history, reports the Post, as the inferno destroyed roughly 6,800 structures in the Pacific Palisades area and about 9,400 in the suburb of Altadena.  

According to the article: “Since then, the FAIR plan has been inundated with claims for damage by homeowners who lost everything — and who had not been able to get coverage on the private market. To date, the plan has paid out $914 million to policyholders, a figure that is expected to grow.” 

Munich Re announced that the wildfires are the costliest “in the history of the insurance industry” and that it expected 1.2 billion euros ($1.3 billion) in claims, however, from an insurance perspective, the losses were “no problem at all”, according to its CEO Joachim Wenning. Private meteorological firm AccuWeather has estimated the total damage and economic loss at between $250 billion and $275 billion. 

Fortune magazine reported that “total claims from major disasters cost Munich Re 3.9 billion euros, 2.6 billion euros of which were related to natural catastrophes, in 2024. The most significant of these was Hurricane Helene, which swept through the southeastern United States in late September, racking up 0.5 billion euros in costs for Munich Re.”