If there is a single bright point that can be found after the most expensive forest fire in the history of California, it is that both the victim property/insurance industry and the independent agents that serve as a personal contact point with the insured now have A golden opportunity. To remind consumers how effective they can be when disasters occur.

In the coming weeks and months, claims adjusters will have the task of evaluating the losses insured among more than 18,000 structures destroyed or damaged in the fires of Eaton and Palisades. The fair plan has only received more than 3,600 claims from this writing. Each case requires the same degree of professionalism and care.

Related: Will the Fair of California have enough effective for its forest fire claims?

While it is often tempting to paint a catastrophe of such magnitude in broader blows (for example, the losses insured probably vary between $ 20 and $ 45 billion, the destruction that covers the surface approximately three times the size of Manhattan), our Focus must remain in serving those who put their personal trust in our hands.

Insured need our industry to respond quickly and efficiently, and independent agents must rise to the challenge.

Call to action

Independent agents face a huge service call at a time when the state insurance market faces great uncertainty. It could be said that the latest forest fires could not have arrived at the worse time for California, which has been harassed by an insurance availability crisis since multiple operators with a considerable market share in the gold state have come out, in great part due to its inability to qualify the adaptation through the State Department of Insurance.

Now, however, it is not the time of the semantics or to point with the fingers. Rather, it is a time for solutions, and a new way to follow.

Related: USAA becomes a third insurer to inform more than $ 1B in claims so far for Los Angeles forest fires

More recently, the California Insurance Commissioner Ricardo Lara, issued an emergency statement that allowed claims adjusters without a license to work, superior by an adjuster with a qualified license, qualified or insurer manager, to share the load when accelerating the claims process. Transporters will still use their own adjusters or even hire with independent adjusters to handle the claims flood.

Following any emergency declaration of forest fires by the governor, the commissioner is allowed to impose a moratorium of one year on non -renewed and cancellations in the affected areas. By 2025, the department has already issued unnovated prohibitions in more than 100 postal codes.

Following any forest fire, the California Insurance Department issues one year mandatory prohibitions in non -renewed in the affected areas. By 2025, the department has already issued unnovated prohibitions in more than 100 postal codes.

The CDI also urges consumers to begin the claims process by contacting their insurance company or their agent to try to solve their claims before contacting a public adjuster or a lawyer.

The need for patience and empathy between independent agencies and their customer service representatives should be maintained in mind as the claims process increases in the coming weeks and months. Sincere empathy is the distinctive seal of any successful agency, but must be constantly maintained, and the members of these agencies, from the main to the CSR, must be aware of their own emotional well -being in tense conditions as the claims claims grow , and agency staff have multiple conversations with insured in one of the worst days of their lives.

The agency’s owners would do well to discuss this challenge with the members of their team and maintain an open dialogue with their contemporaries of the agency to share the best practices in the management of claims that are both efficient and conscious.

Destination of the fair plan

A large percentage of the insured losses of the Palisades and the fires of Eaton will be in the home owners. It is estimated that approximately 22% and 12% of the structures destroyed in the fires of Palisades and Eaton, respectively, are covered by the fair plan.

Keep in mind that because the policies of the Just Plan of California are limited to $ 3 million in housing coverage, some owners will discover how much they could end up paying from their pocket when the increase in demand causes costs of reconstruction of labor and labor and Materials to shoot. In addition, the standard policy language of the fair plan limits coverage to real value, basically, the depreciated value of the house.

Reconstruction delays will also make payments increase for displaced residents forced to long -term housing agreements. The greatest demand for such homes is already causing rental prices to swell, which will lead to higher additional life expenses for carriers, some of which may be limited by the contractual language of politics.

However, the broader question remains: What happens if insured losses exceed the resources of the fair plan?

It is worth noting that the fair plan was never intended to be an insurance fund sponsored by the State. Fira Saleh, director of Moody’s Product Management, said in a blog that as of September 30, 2024, the exhibition of the plan in Los Angeles County was $ 112.2 billion with a growth year after year of 53%, and That the exposure to Los Angeles County represents approximately 23% of the plan of the plan.

The president of Fair Plan, Victoria Roach, recently reported that the plan has a surplus of almost $ 377 million available for claims and expenses that have not yet incurred. Its total cash in question is $ 1.4 billion, with the approximate difference of $ 1 billion reserved for current pending liabilities, such as reservations and expenses of losses, commissions payable and other expenses incurred. The Plan has reinsurance treaties, with payments linked to losses that exceed the first $ 900 million.

If the fair plan is unable to fulfill their compensatory obligations, California insurers must help pay those losses through evaluations proportional to their previous market quotas, which dates back to two years.

For the first $ 1 billion in personal lines and $ 1 billion in commercial line evaluations, insurers could try to recover half of their participation in evaluations through billed rates to the insured.

At the moment, it is still uncertain what will be the total financial responsibility of the fair plan. While the plan has almost $ 6 billion in exposure to a potential loss of the Pacific Palisades fire, for example, the plan recently estimated that its total losses could be closer to $ 3.75 billion, not a small number, but inside Of his current capacity, Roach has declared.

Balance act

Speculation also continues if the massive losses incurred in forest fires will exert more pressure on an insurance market that already has its share of coverage availability problems. Without substantial regulatory actions, insurers, even surplus line operators known for preparing personalized solutions, will require incentives to write more properties in the golden state.

In 2023 and early 2024, the main housing insurers, including State Farm Mutual Insurance Co., Allstate, and farmers withdrew or limited new businesses in California, asking questions about the availability of property insurance, particularly in areas With high risk of forest fire, such as the urban interface of nature (where structures and other human development meet with unrected silvicultures).

When it ended 2024, Lara announced a catastrophe modeling and a regulation of the creation of grades that will allow insurers to use the models in their rates formulations. In return, carriers must increase their number of policies in areas exposed to forest fires equivalent to no less than 85% of their participation in the state market.

Until that time, California was the only state that had refused to recognize such expenses in transport fees, which prevented insurers from achieving the adequacy of the rate.

If insurers can use catastrophe models and transmit the cost of reinsurance, in theory they will facilitate writing more businesses in areas prone to risks. In addition, if insurance companies can recover some or all reinsurance costs, they could buy more, allowing them to assume more exposures to forest fires.

That, certainly, it is a lot of “yes” s.

Time will say whether the appetite of the insurer and the legislative or regulatory action can put into play in the coming years. If they cannot, it will be increasingly difficult, and expensive, obtaining property coverage in California.

Subrogation of sparks

While the causes of fires have not yet been determined, these responses will help insurers determine whether they can subrogate the statements.

The southern California, Edison, which was guilty for both Thomas Fire and Woolsey’s FIRE of 2017 in 2018, is currently under scrutiny for its possible participation in the Eaton Fire’s field. According to Los Angeles Times, residents reported having seen flames at the base of a tower perched on Eaton Canyon, visible in photos and videos shared online.

If it is found that the public service company team has caused the fire, the California Law requires that the public services company pay damage to forest fires and recover its costs through a regulatory process supervised by the Services Commission California audiences.

In the front line

Meanwhile, California independent agents will continue to serve as the human face and friendly ear of our industry to those who have lost so much. The agencies that are members of a network have a competitive advantage in this area, since they have more opportunities to communicate between the postal codes and learn what is working for their classmates to serve customers affected by this tragedy that develops.

However, all agents with insured affected by devastation have one thing in common: in the coming months, they have the opportunity to show how compassionate and effective they can be to help families navigate the slow way to resume a life of Normality relative.

And that is not small.

Swan is Regional/West Executive Vice President for Renissance, a network of independent insurance agencies.

Topics California agencies