Los Angeles insurance giant makes chilling prediction after devastating fires

A California home insurance CEO said the inability to insure homes amid the ongoing wildfires burning hundreds of acres would 'completely upend the state' as it looks to rebuild.  

Mike Zuckerman, CEO and president of the third-largest home insurance company in the Golden State, CSAA Insurance Group, issued an unsettling statement regarding insurance availability in California on Friday.

Zuckerman, unlike other companies who have stopped writing policies or refused to renew customers amidst the raging fires, believes that the state and its wildfires are still insurable. 

'It's hard to think about the answer to that being no,' Zukerman told the San Francisco Chronicle.

With the Palisades and Eaton fires far from containment, Zukerman acknowledged that it is 'impossible to know' exactly how the insurance industry as a whole might react to the fires. 

However, the insurance giant claimed 'there is no alternative' to having home insurance.

'I don't think there's an alternative for us as a society and as an industry and as a people,' he said. 'Not being able to insure homes in California against these kinds of risks will completely upend the state.' 

Over the last few years, many California-based insurance companies have cited the risk of costly wildfires as a reason to stop writing new policies, decline renewal for customers or even leave the state altogether. 

However, CSAA continues to write new policies in the state and renew the vast majority of existing ones.

Zukerman said CSAA did not renew about 5,500 policies -1.2 percent of its total policies in the state - due to wildfire risk in 2024, according to regulatory filings.

However, he added that the companies cancellations are not a sign that wildfires aren’t insurable, Zukerman said, adding, 'it is a sign that insurance companies need to be allowed to charge the prices that match the increased risk in order to insure.'

Now, the question is how much more expensive California insurance will get, and whether more carriers might cut back on their business in the state as additional - and costly - wildfires break out. 

Starting this year, the California Department of Insurance will allow insurance companies to use wildfire catastrophe models to inform new pricing. 

The companies will also be able to pass on some of what they pay for reinsurance -insurance for insurance companies - to their customers, under the new policy.

Such reforms recognize that climate change is increasing overall risk, something Zukerman feels 'insurance companies need to be able to cover.' 

Just how much insurance prices will increase has yet to be seen, however, experts fear that any increase could exacerbate California's affordable housing problem, the Chronicle reported. 

Zukerman's CSAA raised its home insurance rates by 6.9 percent, earlier this year, though others, like Allstate and State Farm, have raised rates by double-digits. 

Aside from ongoing wildfires ravaging the West Coast state, Californians must answer whether or not building new housing in the wildland-urban interface, where forest wildfires can quickly spread to homes, should continue.

The answer, Zukerman said should be no. But the CEO added 'insurance availability is a problem California will have to solve.'