F
armers Insurance has deployed its Catastrophe Response Team in Southern California, setting up shop at multiple locations across Los Angeles County to assist policyholders affected by the recent wildfires. The team is run by trained staff and local brokers who provide support with claims processing, as well as other needs such as water and masks. Luis de Angelis, L.A. district manager for Farmers, noted that the carrier aims to maintain a sense of order in the wake of disaster.

    The state's insurance market is in turmoil due to the devastating wildfires, which may be the costliest in California's history. The fires have destroyed over 12,000 structures, and risk calculations suggest that policyholders will face higher premiums and increased reliance on the undercapitalized California FAIR Plan. Analysts say that insurers began to turn their backs on California after the 2017 and 2018 wildfires, which resulted in covered losses exceeding premium earnings.

    The total insured losses across the market are estimated to exceed $30 billion, with some carriers facing significant exposure. Mercury Insurance, headquartered in Los Angeles, has announced it will surpass its reinsurance threshold, but declined to comment on projected losses. The final tally of claims costs for insurers could exceed their market shares in the state, according to J.P. Morgan's Jimmy Bhullar.

    The recent regulations permitting catastrophe modeling and factoring in reinsurance costs into prices may lead to increased coverage in high-risk areas. However, the growing population in these areas, rising construction costs, and challenging reinsurance market pose significant challenges for insurers. With 1.3 million homes at risk of extreme wildfires in California, more carriers may set up mobile command centers in neighborhoods after a fire.