it was already over. Most folks are with the State Plan- ( exactly like LA Fair Plan here for wind coverage )
All the major carriers- SF, Allstate, USAA, Travelers, GEICO, Nationwide etc had begun "depopulating" their books in California in 2024. Im sure some were renewed prior to announced exit, so those will expire in 2025.
But yes- i could see where State Plan will pick up the "wildfire/fire risk" and a second policy for all other coverage.
But as i think about, i dont know that they can carve out the fire part between fire and wildfire. So that may present a problem.
I think
@SamAndreas posted not long ago about having to get fire thru CA State Plan.
And i imagine that State Plan is similar to LA Fair Plan which is funded by premiums and covered by reinsurance.
the problem comes in when its time to re-up the reinsurance- Since CA Fair plan is mainly for fire coverage ( since no one else will do ), and wildfires are becoming a year-round issue, and with devastating effects, what reinsurer wants to sell coverage that they are almost sure will get losses? How do you put a cost on an almost certain claim scenario? Want $50,000,000 coverage? ok premium is $40,000,000 lol.
Which means the CA Fair Plan HAS to adjust is rating structure.
And there is also the pitfall of VALUE.
Example- i have a client- has $5.5mm bldg. The nominal rate for wind only is around .0090- so should be around $45,000 premium.
However, Fair plan cannot take on the full $5,5mm value- so that building has to go thru the reinsurer. Now the rate jumps to .020 because reinsurer isnt keen on $5,500,000 bldg= $110,000 premium.
So imagine ALL those $10-30mm mansions in the hills surrounding LA. Premiums would be in the $100s of 1000s for them.
its going to be an absolute mess in the coming months out there.
And all that trickles down to the 1300 sq ft $400,000 home in Altedena too. They dont have to deal with the reinsurance issue, but their base rate is going to jump because CA Fair Plan will HAVE to raise it to have sufficient capital for the next wildfire to pay claims.
And just like here with wind, what mortgage company will allow mortgagor to obtain a homeowner policy without fire coverage? ?
none.