California wildfires have so far burned over 40,000 acres in a total of five different fires, following years of significant drought. The winds are still an issue, meaning that the fires will continue to burn. Currently, the fires are only partially contained. Property loss estimates continue to change but current estimates are that damages will amount to $45 billion or more insured costs, and economic losses between $150 to $275 billion, especially since the fires are still ongoing. Most of the losses are expected to be homeowner losses.  Aside from the fire damage itself and loss of life, there are many secondary issues that arise.

The California insurance market was already particularly hard due to past fires in the state; the Camp fire in 2018 burned over 153,000 acres, destroyed almost 19,000 structures and cost $15 billion. The Woolsey fire in 2018 cost $5 billion and the Tubbs fire in 2017 cost $8.9 billion.  Many insurers had already pulled out of the state, leading people to obtain insurance from the California FAIR Plan. The FAIR plan’s exposure has grown significantly since 2018, from $50 billion to more than $450 billion.  If the FAIR plan collapses or the capital cushion is significantly drained because of the fires, then an assessment may be levied on insurers in the state. The FAIR plan has $377 million in cash to pay claims.

A moratorium has been put in place for the next year to prevent insurers from canceling or nonrenewing policies of those in wildfire zones for the next year. This includes those who had received a non-renewal notice 90 days before the fires started.