Los Angeles Wildfire Crisis
Insurer insolvencies and California withdrawals could follow wildfires - report
It's not just land and homes that are burning – it's cash for our industry
The ongoing wildfires in Los Angeles may drive significant changes in California's insurance industry, including potential insolvencies and state withdrawals, according to Daniel Aldrich, co-director of Northeastern University’s Global Resilience Institute.
Drawing parallels to Hurricane Katrina nearly two decades ago, Aldrich suggested potential insolvencies and additional withdrawals from the state’s property insurance market, according to a report from AM Best.
The California FAIR Plan has a significant presence in areas affected by wildfires. Pacific Palisades, one of the regions impacted by recent fires, accounted for $5.89 billion of the plan’s exposure. Statewide, the FAIR Plan reported a 61.3% increase in exposure for the year ending September 2024, reaching $458 billion. During the same period, the number of dwelling policies rose 123% to 248,902.
Victoria Roach, president of the California FAIR Plan, stated in January 2024 that the plan carried $336 billion in property exposure. It was supported by $200 million in capital and $700 million in cash reserves.
California homeowners insurance market tested as fires rage
Raging wildfires in Southern California are an early, high-stakes test of new regulations designed to shore up the state’s spiraling homeowners insurance market.Raging wildfires in Southern California are an early, high-stakes test of new regulations designed to shore up the state’s spiraling homeowners insurance market.
Rules that aim to lure insurers back to the fire-prone state were finalized by the state’s insurance commissioner in December and take effect this month. The regulations allow the companies to consider climate change risks when setting rates. Over time, insurers will also have to increase their coverage offerings to high-risk areas.
The changes are an effort to align California’s insurance rules closer with other states and stem a statewide crisis that’s deepened as climate change increases the frequency and intensity of wildfires and other natural disasters.
That’s on grim display now as five wildfires have burned through 29,000 acres across Los Angeles and surrounding areas gripped by a months-long drought. Nearly 180,000 people remain under evacuation orders, and the fires already rank as the most destructive in the city’s history.
“It’s unprecedented, and it’s unbelievable how many fires we actually have going on,” Karl Susman, president of Susman Insurance Services told Yahoo Finance on Wednesday. “There are literally fires in almost every corner of Southern California.”
Climate Change/Exposure
Investor Climate Group Suspends Activities After BlackRock Exit: Reuters Exclusive
A flagship coalition aimed at aligning the asset management industry with global climate goals said it was suspending its activities on Monday, days after BlackRock, the world’s biggest investor, left amid a political backlash in the United States.
The pause raised concerns that companies will lower their efforts on climate change even after the hottest year on record, but could buy organizers time to review what actions might still be acceptable for U.S. fund firms.
News
Tentative Agreement Struck to Avoid East, Gulf Coast Port Strikes - Autobody News
The International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) have reached a tentative agreement on a six-year contract, avoiding a potential labor disruption that could have impacted East and Gulf coast port operations.
The two organizations announced the agreement in a joint statement. The new contract must be ratified by both parties, but the tentative contract averts the work stoppages that would have begun Jan. 15, when the previous contract extension expired.
The deal addresses key issues, including job protection for ILA workers and the integration of modern technologies aimed at enhancing safety, efficiency and capacity at ports along the East and Gulf coasts. Details were not released to allow ILA and USMX members to review and approve the final document.
According to the statement, “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports -- making them safer and more efficient, and creating the capacity they need to keep our supply chains strong.”
Commentary/Opinion
‘Delay, Deny, Defend’ author addresses American response to CEO killing, reveals frustration toward insurance industry | Repairer Driven News
Author Jay Feinman says frustration witnessed following the killing of UnitedHealthcare CEO Brian Thompson extends to the entire insurance industry including auto and homeowners.
In a MarketWatch opinion piece, Feinman, author of “Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It,” describes his thoughts on why the act of violence forced a national conversation about insurance.
Feinman notes that he was “struck” when learning that investigators found bullet casings inscribed with the words delay, deny, and depose at the scene of the killing.
“Many people responded not by mourning Thompson, but by blaming UnitedHealthcare and other insurers for failing to pay for essential medical treatments,” Feinman writes. “Gleeful online trolls even celebrated the alleged killer as a heroic vigilante.”
The killing revealed American “resentment and even rage,” Feinman says.
“And while the focus has been on health insurance, these frustrations extend across the broader insurance landscape,” Feinman writes. “Homeowners insurance, for example, is becoming harder to get in many states, even as coverage is shrinking, and car insurance rates are also skyrocketing. These trends are fueling widespread discontent with insurers of all kinds.”
Broken Trust – Insurance Industry Included - Insurance-Canada.ca - Where Insurance & Technology Meet
It is a well-known adage that ‘trust takes years to build, seconds to break, and forever to repair.’ The extensive and growing loss of trust in our most treasured institutions is responsible for the recent and rapid transformation of behavior and attitudes across the entire landscape.
Trust is created by the belief that institutions will uphold their stated values, follow established rules, and act with integrity, leading to a willingness to rely on them and respect their decisions. High levels of institutional trust are crucial for a well-functioning society, enabling cooperation, social stability, and citizen engagement.
When trust in institutions is low, it can lead to cynicism, social unrest, decreased participation in civic life, and difficulty implementing policies. The insurance industry ranks high on the list of vilified industries, including but not limited to healthcare.
By Stephen Applebaum & Alan Demers
The Crisis in Homeowners Insurance | Insurance Thought Leadership
In theory, increasing insurance premiums signals rising risk and spurs action that mitigates disasters like California's fires. In practice, climate is changing too fast, and government is being too slow.
There is a fundamental tension underlying the wildfire disaster playing out in California, and it's not going away. The tension is between climate change and human nature, as represented both in individual behavior and in the actions of our governments.
The damage from hurricanes, severe convective storms, drought and wildfires has grown even faster than expected over the past several years, and the increases show no signs of slowing. At the same time, we keep building in areas, such as along coasts and in the wildland-urban interface, that are especially vulnerable.
And that's just the start of our behavioral problems. We aren't wired very well for planning for crises like wildfires. You're telling me I have a 2% chance of wildfire in the 10 years I'm going to own this house, and I'm supposed to spend how many tens of thousands of dollars to harden the property? Even if the math makes sense, most people will glide past the issue.
Paul Carroll, editor in chief, Insurance Thought Leadership
Research
New research from Sure reveals striking digital divide of insurance preferences between younger and older consumers
Sure, the insurance technology leader that unlocks the potential of digital insurance, today released new research, revealing a clear preference for digital insurance experiences among younger consumers. According to Sure's new 2025 Consumer Sentiment Report: Preferences for Insurance in a Digital World, 64% of Digital Natives believe insurance should be overwhelmingly purchased and managed online in today's digital world. As Digital Natives (born in 1975 or after) overtake Digital Immigrants (born in 1974 or before) as the majority of U.S. consumers over the coming decade, this report clearly shows that their preferences should push the insurance industry to evolve towards digital-first experiences.
"As it currently stands, only a small fraction of insurance transactions are truly online – they still involve a human at some step. To draw a comparison, this puts us at a similar point in time with the emergence of credit cards, when prior to that innovation, almost all transactions occurred via cash or checks," said Wayne Slavin, co-founder and CEO of Sure.
InsurTech/M&A/Finance💰/Collaboration
Global M&A activity up 15% in 2024 led by surge in large deals: WTW
In 2024, the number of global mergers and acquisitions (M&A) deals valued over $100 million increased by 15%, rising from 619 in 2023 to 710, according to WTW’s Quarterly Deal Performance Monitor (QDPM).
This growth was mainly driven by a surge in large transactions (worth between $1 billion and $10 billion), with 99 deals completed in the second half of 2024, a 36% increase compared to the same period in 2023.
For the full year, large deals rose by 21%, reaching 162 deals in 2024 compared to 134 in 2023. Additionally, 15 megadeals (worth over $10 billion) were completed globally last year, up from 11 in 2023.
Jana Mercereau, Head of Europe M&A Consulting at WTW, stated, “Buyers have endured a prolonged period of volatility and challenges on multiple fronts. Yet the underlying drivers of strategic growth and desire for new capabilities persist, with pent-up demand and strong balance sheets set to provide a tailwind for more M&A in 2025.”
In North America, M&A activity grew 14% year-over-year, with 361 deals completed in 2024 compared to 317 in 2023. Europe saw a 32% increase, from 117 to 155 deals, while Asia Pacific had 163 deals, up from 155 in 2023.
Events
ClimateTech Connect April 15-16, 2025
Ronald Reagan Building and International Trade Center / Washington, DC
ClimateTech Connect is the premier global conference and tradeshow for leaders advancing innovation in climate adaptation, resilience, and profitable sustainability through technology.
ClimateTech Connect brings together thought leaders, innovators, policymakers, and leading industry experts to explore the intersection of climate resilience strategies and technology. We are expecting 1500 attendees from the following industry sectors:
- Insurance and Financial Services
- Corporates
- Investors
- Government
- Start-ups and Scale-Ups
Join us for two days of inspiring keynotes, panel discussions, workshops, an electrifying expo hall + demo stage, and networking as we delve into the latest advancements and solutions in climate resilience. Together, we will shape a more sustainable future.
InsurTech Consulting and our 'Connected’ newsletter are proud media partners of ClimateTech Connect with a special 20% discount for our subscribers”. Use code:Connected20, register HERE
February 6 CIECA Webinar Collision Industry Update: What You Need to Know
The Collision Industry Electronic Commerce Association (CIECA) announced that the next CIECA Webinar will be held on Thursday, February 6 at 11 am PST/1 pm CST/2 pm EST: “Collision Industry Update: What You Need to Know.”
The one-hour live broadcast will feature Greg Horn, chief industry relations officer at PartsTrader.
During the free webinar, Horn will explore how recent changes and future technology trends will impact the collision industry. All collision industry stakeholders, including CIECA members and non-members, are invited to attend the presentation.
Topics will include:
- How the proposed tariffs could impact the auto industry
- Latest news on Stellantis and the UAW
- An update on collision parts inflation
- An overview of parts delivery days by part type
As the chief industry relations officer at PartsTrader, Horn hosts the PartsTrader Industry Trends webinar and is a conference speaker. A true ‘car guy,’ Horn has owned over 62 cars. He started in the automotive field, working in VW and Porsche repair shops in high school.
Canada
Insured cat losses in 2024 in Canada hit record - Business Insurance
Severe weather events caused more than 8.5 billion Canadian dollars ($5.9 billion) in insured damage in 2024, making it the costliest year on record, Canada-based Catastrophe Indices and Quantification Inc. said in a statement Monday.
The previous record was CA$6 billion in 2016 following the Fort McMurray wildfires, CatIQ said.
An August hailstorm in Calgary, Alberta, that caused CA$3 billion in insured losses in just over an hour was the most destructive weather event recorded last year. Flooding continued to cause significant damage in nearly every region of the country, CatIQ said.