Expected claims payments to Los Angeles County wildfire victims appear to have exceeded $900 million for the state’s insurer of the last resort, allowing it to tap into “reinsurance” payments from back-up providers.
In a statement released Thursday, Jan. 30, the California FAIR Plan reported receiving more than 4,400 claims from victims of the Palisades and Eaton fires in the past three weeks.
“The FAIR Plan is accessing reinsurance to help pay claims,” the statement said.
In earlier statements, the FAIR Plan said it can only tap into reinsurance — essentially insurance for insurance companies — once it pays its first $900 million in claims.
See also: Why all California homeowners could be on the hook for LA County wildfire costs
The damage caused by the wind-fueled firestorms in Pacific Palisades, Malibu, Topanga and Altadena neighborhoods consumed more than 37,000 acres, destroying nearly 16,000 structures and killing 29 people.
Finances for the “Fair Access to Insurance Requirements” Plan have been under scrutiny since the devastating wildfires erupted on Jan. 7. If the state-created insurance pool runs out of money, it can invoke payment mechanisms that can affect virtually every insured home and building owner in the state.
The FAIR Plan provides coverage for homes and businesses that can’t get policies on the open market. Consumers can only get fire coverage through the plan, often at a higher cost. In addition, owners must seek separate “wraparound” policies for liability, theft and other types of coverage.
Yet, the FAIR Plan only has enough cash to cover a tiny fraction of its total $458 billion exposure. Last March, FAIR Plan President Victoria Roach told the provider only had $700 million in cash on hand.
Should it run out of money, state law gives the FAIR Plan the ability to pass the hat among more than 100 fully licensed insurance companies in the state, provided Insurance Commissioner Ricardo Lara approves such an…
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