Los Angeles Wildfire Risk: Shorter Return Periods and Insurance Challenges
• Los Angeles wildfires in January 2025 caused over $22 billion in insurance claims, prompting reforms in California's insurance laws.
• Climate change and increased development in the wildland-urban interface may shorten the return period for large-scale wildfires.
• The FAIR Plan's substantial coverage of high-risk properties poses systemic risks for insurance carriers through post-loss assessments.
Wildfires reshape California's insurance landscape significantly
A recent report from Morningstar DBS Research underscores the profound effect of the January 2025 Los Angeles wildfires on California's property and casualty insurance landscape. These devastating fires, which razed over 16,000 properties and resulted in claims exceeding $22 billion, have spurred significant reforms in California's insurance laws.
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