More than 4,400 homeowners in Los Angeles County have proposed insurance claims to California’s fair plan to Last Resort Insurance in the state.
This is enough to further incorporate the intense financial situation of the plan into the crisis model and increase the opportunity of the homeowners across the state. Whether they live in the fire protection area, their insurance costs will increase.
FAIR provides the homeowner’s insurance scope, and they cannot find insurance companies to provide insurance policies for excessive fire risks. FAIR also provides lower costs, but provides greater restricted policies for those who cannot afford the income rate.
But FAIR’s asset foundation is very thin, with only hundreds of millions of dollars of funds. So far, it seems that the fair claims are over $ 900 million, which is a threshold for fairness to turn to reinsurance to pay for its cost.
Reinsurance is fundamentally insurance. When the insurance company exceeds the claims of the plan, it provides cash. The price of fair and re -insurance is 2.6 billion US dollars.
As of January 28, the fair plan has received more than 3,200 damage caused by Palisad fire, and more than 1,200 claims caused by Eaton fire. The claims are different according to the type and number of losses and the loss of losses.
The final cost of LA-AREA fire is unclear, although the property value analysis company Corelogic estimates that real estate losses will be between 35 billion and $ 45 billion.
Pacific Palisades is one of the highest fair plan holders in the state, and insurance companies estimate their exposure at nearly $ 5.89 billion.
If re -insurance proof is not enough to pay FAIR liabilities, state regulations require insurance companies to make up for the difference. These companies are allowed to increase the interest rates of the homeowners in accordance with the same regulations to provide this money.
A bill through the state legislature can reduce the demand for interest rate increases to the interest rate of homeowners through the sale of bonds, thereby transferring at least some costs from the state owner to the state owner to the entire state.
Companies such as State Farm and Allstate have stopped selling new homeowners’ insurance policies in California, while other companies restrict that they will cover or increase the price of underwriting scope, or both. According to data from the Insurance Information Research Institute of the industry, California’s insurance company’s claims and claims received per USD from 2013 to 2022 were $ 1.08.
With the retreat of the insurance company, the fair plan has seen that the number of policies has increased from more than 200,000 in September 2020 to more than 450,000 as of September last year. During the same period, the loss of its entire state doubled.
FAIR’s cash totaled a total of US $ 200 million, and the re -insurance coverage was only $ 2.6 billion.
For decades, insurance companies in California have been banned from using the so -called “disaster model” at the set rate. Now, the latest policies have been transferred from the insurance department of California to use these models.
Computer plans do not rely on past claims data to a large extent, but consider the possibility of multiple variables affecting property losses to better improve the risk of insurance companies.
Another major policy change enables insurance companies to charge the cost of California homeowners to make the reinsurance costs purchased from other insurance companies in order to limit the losses of huge disasters (such as wildfires and floods). The cost of transferring to policy holders is common elsewhere, but California will improve major changes in premiums.
