The California FAIR Plan, the state's insurer of last resort, has reported receiving over 4,400 claims in just three weeks from victims of the devastating Palisades and Eaton fires in Los Angeles County.
The massive influx of claims, expected to exceed $900 million in payments, has prompted the FAIR Plan to access its reinsurance coverage - backup insurance that becomes available after the initial $900 million threshold is met.
The January wildfires, which were intensified by strong winds, caused widespread destruction across Pacific Palisades, Malibu, Topanga, and Altadena. The fires consumed more than 37,000 acres, destroyed nearly 16,000 structures, and tragically claimed 29 lives.
The FAIR Plan currently provides coverage for approximately 22% of structures in the Palisades Fire zone and 12% in the Eaton Fire zone, with potential exposure totaling over $4.7 billion across both areas. As of January 28, the Plan had received over 3,200 claims from the Pacific Palisades Fire and more than 1,200 from the Eaton Fire.
To handle the surge in claims, the FAIR Plan has deployed about 250 desk examiners and field adjusters, while also hiring temporary staff and engaging independent adjusting firms. The organization is ramping up its workforce to manage customer service and damage inspections effectively.
If the FAIR Plan exhausts its resources, state law permits it to seek assessments from licensed insurance companies, subject to approval from Insurance Commissioner Ricardo Lara. These companies could potentially pass these costs to their policyholders as supplemental fees, though the FAIR Plan has not yet requested such an assessment.
The last time the FAIR Plan issued an assessment was in 1994. The organization's financial stability has been under close observation since the fires began on January 7, particularly given that it had only $700 million in cash reserves as of last March, despite having a total exposure of $458 billion.