(Left to right) Lloyd Dixon, Tony Cignarale, Ben Allen and Emily Rogan spoke on insurance issues facing wildfire survivors at a meeting on Sunday in Pacific Palisades.
After the Palisades Fire, people find they are underinsured, are not being paid for claims, or are having trouble receiving insurance money for smoke damage. The Palisades Recovery Coalition hosted an insurance townhall on August 24 to address problems and more.
Othe insurance issues include people worrying that they may not be able to get insurance in the future, that the only insurance available will be California Fair Plan (CFP) and that there are issues specific to condos, townhomes and HOAs. The CFP commercial coverage limit of $20 million which is the maximum coverage for a condo HOA. One person noted that most Palisades Condo HOA’s will be non-renewed, and the fair plan coverage is not enough in most cases.
Some residents wanted to know if they build a “hardened” new structure would there be less costly insurance. One person wrote in the chat “It doesn’t matter how much we harden our homes if the fire burns for three days at 2200 degrees without any water. Current code includes IBHS+ build to one to two-hour rated homes. What will the State do for us to ensure brush clearance, fire saving, and water will be there for the next fire? Would insurance companies be willing to contribute to the overall resiliency measures?”
This editor wanted to know would the insurance companies hold cities responsible for the problems, such as no water, lack of hydrants and brush clearance, downed electrical wires or would the homeowner bear the brunt of the increased costs.
On the insurance panel were State Senator Ben Allen; Deputy Commissioner Consumer Services and Market Conduct Branch Tony Cignarale; Director of Rand Feinberg for Catastrophic Risk Management and Compensation Lloyd Dixon; and Emily Rogan, Senior Program officer of United Policyholders.
The answers to the questions? Nothing concrete.
Allen has proposed legislation SB 495. This bill would require insurance companies to pay wildfire survivors 100 percent of their contents coverage without needing a detailed inventory list. Now, if a claimant itemizes every item in their household, some insurance companies still delay and deny payment, saying either the consumer need receipts (burned), and the items listed are under examination. Even if SB 495 passes, it would not apply retroactively.
“We are putting pressure on the industry to do right,” Allen said,
“We have a regulatory problem in California,” said Dixon, who coauthored the August 2025 paper “After the Los Angeles Wildfires” Implications for Risk Mitigation, Compensation and the Insurance Market. https://www.rand.org/pubs/conf_proceedings/CFA3937-1.html Dixon predicted higher rates, but that one would always be able to get coverage from the Fair Plan. But “it will be expensive because of the higher risk.”
Cignarale said, “We see some companies doing it right and other companies not doing it right. We’re still handling claims. The Fair Plan and State Farm have come under scrutiny.”
It becomes obvious that the California insurance market is in trouble and unfortunately no one has answers.
How did California get here? Proposition 103 was passed in 1988 and required insurance companies to obtain prior approval from the California Department of Insurance before setting a higher rate. It also mandated a 20% rollback on rates, established a rate-setting formula for auto insurance based primarily on driving records, and made the Insurance Commissioner an elected position. The current commissioner is Ricardo Lara.
According to Cignarale, to raise rates above 6.9%, a company would be required to hold a hearing, and he blamed insurance companies for not asking for more.
Measured against home values, insurance costs are cheaper in the Palisades than in 97% of U.S. postal codes, according to a Reuters analysis of a national database of price data collected by Mulder and University of Pennsylvania’s Wharton School professor Benjamin Keys as well as home-value data calculated by Zillow, a real-estate firm.
According to United Policyholders, “The prospect of such high-cost catastrophes had long worried California’s private insurers, who said the premiums they were legally allowed to charge did not match the escalating damage from fires fueled by climate change. In the past two years, seven of the state’s top 12 insurers have pulled back on coverage by no longer issuing new policies or not renewing existing ones.”
Though the premiums offered by the FAIR plan are typically higher than those from private insurers, participation in the plan has more than doubled in the past four years. In Pacific Palisades, the number of FAIR plan policies increased 85 percent from 2023 to 2024 — growing at roughly twice the statewide rate.
“There’s definitely going to be some people who don’t have any insurance,” said Amy Bach, executive director of United Policyholders in a January 2025 story (“An Insurance Crisis Was Already Brewing in L.A. Then the Fires hit.”) but we know a lot of the people affected by these fires will have been insured through the FAIR plan. If they’re in the FAIR plan, we know they’re underinsured.” click here.
Vox in a January 2025 story identified insurance price controls as incompetent governance ( “There Are No Grown-ups in California”) and wrote that the wildfires led Californians to the sinking realization that “no matter how bad things get, the real grown-ups can’t be called in to save the day because they don’t exist”.click here.
The Eaton Fire Survivors Network, led by Joy Chen hosted a press conference today, August 25, with Assemblymember John Harabedian, Senator Sasha Renee Perez, LA County Supervisor Kathryn Barger and Altadena Town Council Chair Victoria Knapp. Commissioner Lara was asked to:
- Expedite the State Farm Market Conduct Exam
- Guarantee smoke coverage under the FAIR Plan
- Enforce California law to keep families housed
- Require transparency in loss estimates
- Make CDI’s complaint process transparent
“The Palisades Recovery Coalition” might have thought that it “hosted an insurance townhall on August 24 to address problems and more” but it did not.
What was actually hosted by the PRC was a Senator Ben Allen “listening” session so that Senator Allen could aid his potential run for Insurance Commissioner in 2026
Senator Allen wanted the audience to focus on providing him with ideas on how to make insurance a better experience in the future
As in, if Senator Allen eventually becomes Insurance Commissioner then Allen could possibly pixie dust the current insurance experience
Allen is an earnest and a likeable person but he knows as little about insurance as the current Insurance Commission and bon vivant, Ricardo Lara
Allen suggested that maybe more regulation could do the job. If more regulation resulted in higher insurance costs then maybe subsidies could be provided to defray the cost of more regulation
However, the audience was almost exclusively focused on airing current grievances
Whenever an audience member asked a question about current grievances, Senator Allen punted the question to one of the three people he brought along with him: Tony Cignarale, Emily Rogan and Lloyd Dixon
Tony was at the meeting possibly to get facetime with his future boss. According to Tony everything was hunky-dory
Lloyd Dixon said California did not have an insurance capital problem rather it had an insurance regulation problem. When Ben Allen asked, “what do you mean California has an insurance regulation problem?”, the penny dropped and Dixon probably wondered what would happen to whatever retainer/engagement fee RAND’s social just program receives from the California State Senate. He might have wondered if he would continue to serve as the California State Senate’s designee to the governing board of the California Earthquake Authority
Dixon’s comment that “one would always be able to get coverage from the Fair Plan” is a complete fabrication. As an example, State Farm has 20% market share of the “admitted” homeowner insurance market. If State Farm non-renews a homeowner in the admitted market then the homeowner can seek a FAIR Plan policy where State Farm also has a 20% market share of FAIR Plan policies. FAIR Plan is not government insurance it is simply a mechanism for the same carriers that operate in the admitted market to charge homeowners far more for insurance subject to a $3 million policy limit cap
Now if, as a thought experiment, regulation forced all admitted carriers to flee the California admitted market would there still be a FAIR Plan? Probably not, because an insurance company’s FAIR Plan exposure is driven by its admitted market exposure. No admitted market, no FAIR plan
You note that “Allen has proposed legislation SB 495.” Senator Allen conspicuously failed to flesh out the fact that SB 495 is already DOA. The “eliminate the list” fantasy of Allen and Lara has been scaled back to 65% by a committee within the California Assembly. There is no evidence that SB 495 is even going to make it out of the Assembly committee
Add the SB 495 success to Allen’s SB 549 miracle that introduced Palisades residents to Lindsey Horvath’s insane Blue Ribbon Commission on how folks in the Palisades should live their lives
The observation that “It becomes obvious that the California insurance market is in trouble and unfortunately no one has answers” is not correct
37 years after the passage of Prop 103 “It becomes obvious that the California insurance market is in trouble and unfortunately no one has answers” as long as the focus is on more regulation as the answer. If instead you start with the idea that it took 37 years for Prop 103 to kill the homeowner insurance market you might be on the path to a solution
Prop 103 is a failure but the inability of Consumer Watchdog, Joy Chen, the Insurance Commission, and others with a regulatory bent, to recognize the failure of Prop 103 is just a sign of cognitive dissonance
Insurance regulation is to the current mess with homeowner insurance as rent control is to the housing messes in Berkeley, New York City, San Francisco and Santa Monica
So if more regulation leads to a bigger mess, what might lead reduce or eliminate the mess?
Hmmmmmmmmmm, that’s a stumper
If Prop 103 and the heavy hand of progressive insurance regulation were eliminated, then 1) the cost of homeowner insurance would rise to a level that insurance companies from all over the world would want to enter the California homeowner insurance market and 2) insurance companies would be eager to pay insurance claims. Because higher rates would give insurance companies the money to pay claims
Milton Friedman, who is probably loathed by a vast number of people in the Palisades (if they even know who he was), was fond of uttering “there is no such thing as a free lunch”
He was right and he was wrong
Prop 103 was and is a free lunch. But it is worth noting that Prop 103 is the free lunch that took 37 years to kill the homeowner insurance golden goose
The Sunday event was not meant to help Palisades residents
The Sunday event was meant to help Allen’s campaign aspirations
Well said Don.
Appreciate the constructive criticism Don. If I was “punting questions” to the experts it was because they were just that: deep subject matter experts who had come to answer questions from the community: some macro and some micro. You correctly point out that I am not an expert on insurance – my interest is in helping folks better understand the ins and outs of the current system and how to navigate it and to better understand it all myself so it can help with my policy work both now and in the future. I don’t know whether my bill to assist people with contents coverage will pass but it has already passed out of Assembly Insurance Committee and I am optimistic about its prospects – but maybe you know something I don’t know. Many people came up to us afterwards happy about having their many questions answered, given how hard it is to get straight answers about insurance and the system. You seem to know a lot about the system, perhaps you work in insurance, but for many it’s been a very difficult experience to navigate and it’s my hope that folks left a little better informed.