This news podcast discusses the California FAIR Plan, a fire insurance program acting as an insurer of last resort. The podcast details how the increasing frequency of wildfires and the withdrawal of traditional insurers from high-risk areas are straining the FAIR Plan, leading to higher premiums and limited coverage for homeowners. The program, while privately run by insurance company executives, is mandated by California law and faces potential insolvency due to the rising costs of catastrophic events. For example, the number of FAIR Plan policies in Pacific Palisades increased from 350 in 2020 to 1400 in 2024, representing a $6 billion exposure. The podcast highlights the challenges of pricing climate risk and the potential for the FAIR Plan to become a permanent solution for a large segment of the market, rather than a temporary measure.
