Fox Business' Cheryl Cassone breaks down the potential economic impact of the Los Angeles wildfires as they continue to consume local communities.
California residents' homes and iconic landmarks are now at the mercy of the raging Palisades Fire, and state legislation to expand insurance access across the Golden State may have come too late.
Just before the new year, the California Department of Insurance announced that it was in the final stages of passing a “Sustainable Insurance Strategy,” which according to Text of the Regulations, Insurance companies should increase coverage in high-risk, wildfire-prone areas and limit costs to consumers.
But because of a 30-day review period, the law didn't take effect when five wildfires — the Hearst, Eaton, Woodley, Palisades and Tyler fires — started burning in Los Angeles on Tuesday, Fox Business' Sheryl Cassone reports. County, Pacific Palisades and the Sylmar neighborhood of Los Angeles and another near the city of Pasadena.
The fire is zero percent contained. officials told Fox NewsWhile more than 30,000 residents are under mandatory evacuation orders. Governor Gavin Newsom also declared a state of emergency, warning that the worst winds were expected between 10 p.m. Tuesday and 5 a.m. Wednesday.
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“Many of these residents have not been able to get insurance for their homes [for] Fire coverage, whether it's renter's insurance or homeowner's insurance,” Casone said On “Fox & Friends First.” After citing high insurance costs due to increased destruction in recent years.
Firefighters run as a brush fire burns in Pacific Palisades, California on January 7, 2025. (Getty Images)
“So many of these people, unfortunately, will not be able to recover their losses either.”
Led by Commissioner Ricardo Lara, the law specifically requires insurance companies to write policies for at least 85% of their market share and increases that threshold by 5% each year, creates cost caps, establishes a standard policy cost and “prevents model shopping.” will.”
Only five of CA's top 12 insurance companies are still writing new policies.
“Californians deserve a reliable insurance market that won't back away from the communities most vulnerable to wildfires and climate change,” said Commissioner Lara. In a Dec. 30 press release.
“This is a historic moment for California. My sustainable insurance strategy is focused on addressing the challenges we face today and building a resilient insurance market for the future,” he continued. “With input from thousands of residents across California, this reform balances consumer protection with the need to strengthen our markets against climate risks.”
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Fox Business' Max Gordon reports on the latest news that Allstate is set to raise California home insurance rates by 34% at Verney & Co.
The California Department of Insurance also notes that all states except California allow reinsurance costs at coverage rates, and a department-led review in 2023 revealed that companies use reinsurance as the top strategy used to expand coverage in high-risk climates.
Seven of the 20 most destructive California wildfires have occurred in the past five years. Forest and Fire Protection Department In terms of reported economic costs, the 2018 campfires cost $10 billion; The Tubbs Fire cost $8.7 billion in 2017; And the Woolsey Fire cost $4.2 billion in 2018.